国际商务谈判(txt+pdf+epub+mobi电子书下载)

作者：窦然

出版社：复旦大学出版社

格式: AZW3, DOCX, EPUB, MOBI, PDF, TXT

国际商务谈判试读：

前言

时隔将近20年，当笔者重返高校任教，领衔编撰的第一本书，竟然是这部英文版的《国际商务谈判》，这真是件令人既兴奋又有压力的事情。

兴奋的是，终于有机会可与读者分享自己就职于海内外多家商务机构所见所闻和经历的一些谈判故事，以及平日收集的诸多国际商务谈判的典型案例。压力是，这本书被列入复旦大学出版社“21世纪国际经济与贸易专业教材新系”，并且是为数不多的全英文版本之一，能否以浅显地道的英语，有创意地将实际案例与理性分析糅合在符合现代高教特点的教材中，的确是一件颇具挑战的任务！

值得欣慰的是，我们有一支很棒的编写团队！其中，既有资深的国内外英语专家鼎力相助，又有经验丰富的南北高校国际商务双语教学骨干倾情参与，加上时逢中国改革开放的火热年代，无数活生生的商战素材和资料可供借鉴，凡此种种，增添了自己担纲编写此书的几分底气。

在商言商。商战的最终目的是获利，而商谈的最佳结果是双赢或多赢。凡参与国际商务谈判者，或许不一定有全面扎实的专业背景，但要想取得谈判成功，或避免在谈判中陷于被动，就必须掌握一定的谈判策略和技巧，并具备广阔的国际视野和跨文化的知识储备。当然，良好的外语功底会有助于降低谈判的交际成本，提升交流的乐趣。为此，本书紧扣“国际”二字，围绕“应用”这个主题，将一个个生动的国际商谈案例串联于全书始终——每章先以开篇案例引出主题，接着，在主要节目中穿插相关案例佐以分析，结尾以案例强化主题，归纳要点，提出问题与思考。全书用这种有节奏地将读者引入各种国际商务谈判情景的方式，以期达到持续激发读者学习兴趣、强化对谈判策略的理解和相关技巧掌握的目的。这，或许算是本书的一个特色吧！

本书由十二章组成，涉及国际商务谈判的各个环节和相关知识，如谈判的准备与开局、磋商策略、僵局化解、签约须知、语言技巧、心理素质、不同国家和地区谈判者的谈判风格和相关礼仪，等等。鉴于本书的对象主要为中国高校生、进修生、来华留学生和从事涉外商务工作的相关人士，所用英文力求浅显通俗，层次结构力求清晰完整。学习时还可结合多媒体方式、现实案例讨论和模拟谈判等形式，学活用活，触类旁通。

本书的编写人员为：窦然、苏丽文（第一章、第二章、第三章、第四章、第五章、第八章、第九章），罗树民（第六章、第七章），黄海（第十章），解萌（第十一章），郭小婷（第十二章）。窦然担任本书主编，负责总纂；苏丽文负责语言统稿，并与罗树民担任副主编。

曾在北京高校及东北财经大学任教11年的美国专家Jolie V.Haug, D.C.女士参与了本书的文字校对工作，回国后还经常通过电子邮件和网络视频，就本书英文词句的准确表述与我们反复切磋，提出许多宝贵建议。在此，我们深表谢意！并祝她身体健康，愿她在俄勒冈州家乡与3个子女及10个孙辈共享天伦之乐。

由于编者水平有限，书中难免存在错误与不当，敬请读者不吝赐教。窦然2007年9月于上海

总序

现代经济发展的实践表明，国际贸易是经济增长的强大推动力。第二次世界大战后，国际贸易的迅速发展在全球范围内引起了国际分工体系的革命性变革和福利分配格局的重组，极大地促进了经济增长。中国实行改革开放和加入世界贸易组织，加速了对外开放的步伐，外贸业务增长迅速，对外贸易对经济增长的贡献度不断提高，市场对外贸人才的需求急剧增加。

为了适应国际经济理论的不断创新与拓展以及外贸业务发展的需要，加快培养出更多掌握经济学理论知识、具有良好的外语基础、熟悉WTO的游戏规则、了解国际惯例、熟悉国际市场运作规则、具有浓厚的国际意识、掌握具体操作能力的国际经济与贸易专业应用型人才，必须从国际经济与贸易专业的课程体系、课程内容、教学方法、教材编写等方面进行探索和创新。“复旦卓越·21世纪国际经济与贸易专业教材新系”教材编委会精心策划，在总结过去教材建设经验的基础上，结合应用型本科教育的特点，借鉴国内外经验做法，经过反复研究论证和撰写，推出了“复旦卓越·21世纪国际经济与贸易专业教材新系”。这套系列教材包括《国际结算》、《国际贸易实务》、《外贸实务》、《国际运输与保险》、《WTO规则与运作》、《外贸函电》、《单证实务》、《国际服务贸易》、《报关实务》、《进出口商品检验》、《国际商务谈判》、《国际贸易专业英语》等12种。

这套系列教材同时作为上海市十大教育高地之一——外贸经济本科教育高地的标志性教材和国际经济与贸易专业人才培养的重要成果，具有“新、特、实、强”等特点。设计思路新颖，强调学以致用，突出“以学生为中心”的思想；力求创新写作体例和研究分析方法；观点内容着力体现前瞻性、前沿性、动态性，并做到深度和广度适宜。课程体系体现涉外经济类专业特点，采用中文和英文双语相结合的办法，凸现双语教学特色；注重实践性、实用性、可操作性，便于实践教学。编写教师的阵容庞大，起点高，教学经验丰富，研究能力强。

我们希望，通过这套系列教材积极探索出一条国际经济与贸易专业教学改革的新路子，为国际经济与贸易学科在中国的发展做出贡献。由于我们的理论水平和对外贸易实务操作技能有限，这套教材会存在许多不足之处。希望通过这套教材的出版，与国际贸易学界、政界以及从事实务工作的同仁共同研究和探讨，进一步提高教材的编写水平，提高教学和科研质量。丛书编审委员会2006年2月

Chapter 1　An Overview of International Business Negotiation

Key Points：

1.Concepts of business negotiation

2.Characteristics of international business negotiation

3.Forms of international business negotiation【Preview Case】Mr. Lu Weiguang, President of Anxin Company, is pondering how to circumvent the control of the Taiwanese business people over the quantity and price of timber export when he comes upon a good idea—to purchase a stretch of forest directly in Brazil, then he would own the source of timber in a foreign land with control over its price.He immediately starts off with this idea.However, a few problems crop up.First, almost all the forests in Brazil are owned by Indians.Anyone with the intention of purchasing a forest has to approach them.Then how to bridge the wide gaps in language, customs, culture and religion between them？Second, Indians have their own laws prevailing over their preservations.Any transactions in large volume must be approved by the head of their tribes.As they view it as their source of life, it is very difficult to lay hands on their forests.Will Mr.Lu Weiguang be likely to get what he wants？How to get？How much will he get？These are the questions Mr.Lu had to handle.

As far as the limited resources in the world are concerned, our needs and wants are infinite. To resolve these contradictions and to avoid the conflicts brought about by the escalation of these contradictions, negotiation has turned tobe one of the major approaches to settling the conflicts.Today this is especially the case with the globalization of the world's economy.To get more irreproducible resources and high-quality goods at low prices, to establish plants in a foreign country to circumvent trade barriers, to gain in the overseas capital markets, these cross-border business activities of varied sizes and forms are impossible without negotiation.

1.1　Definition and Characteristics of International Business Negotiation

The world we are living in is full of conflicts. There are two ways to resolve the conflicts：one is the use of force and the other is negotiation.In the field of international business, the era when one party manipulated the other by means of violence and force has long gone.Instead negotiating has become an effective approach to resolving conflicts and adjusting interests.

1.1.1　Definition and characteristics of negotiation

The word“Negotiation”derives from the Latin word“Negotiari”，which means“to do business”. Now in a broad sense, negotiation refers to the action and the process of reaching an agreement by means of exchanging ideas with the indention of dispelling conflicts and enhancing relationship to satisfy each other's needs.

From the time memorial, home or abroad, a numerous varieties of negotiations have been conducted. Though negotiations vary in forms and contents, they all demonstrate the following characteristics：（1）Every negotiation involves two or more than two parties

Even though you can role-play another person to negotiate with yourself, the counterpart you role-play is bound to represent interest different from yours. In effect, there are at least two or more key participants in a negotiation.The number of the major parties in a negotiation, from the debate of the United Nations with more than 200 members to a talk about marriage arrangements, may be as many as over a hundred, but absolutely never less than two.（2）The objective of a negotiation must be definite

Different from everyday talk, the purpose of a negotiation is to persuade someone else into accepting one's own ideas, and to maintain or achieve mutual interests. At the same time, the other side participates in the negotiation with the similar purpose of maintaining his or her self-interest and advocating the acceptance of his or her ideas.Rambling negotiation without a clear purpose is nothing but a waste of time, leading to nowhere.In essence, it is not negotiation.（3）Negotiation must be conducted on an equal basis

Regardless of whether it is a high-level negotiation or a low-level negotiation, both sides are independent and equal in dignity and legal status. Neither side is subordinate to the other side or supposed to coerce the other side into giving in.Only under the prerequisite of independent dignity and equal status all sides of negotiation are likely to sit down to serious talks and give a complete and accurate account of one's ideas.For instance, when a person applies for a position or talks about a pay rise with the boss, he or she is conversing with the boss independently and equally.There are no such rules that the minority should submit to the majority and the lower level should be subordinate to the higher level.（4）A consensus must be built on the basis of mutual concession

In negotiation, the self-interests of all sides do not necessarily increase or decrease on a reciprocal basis. Nevertheless, if only one side makes concession or gain complete victory, it is not a genuine negotiation.The agreement established in a negotiation, in which one side totally lost its self-interest, is hard to be implemented.（5）Negotiation involves exchange of ideas, communication, persuasion, compromise, and suchlike

During negotiation, the interaction among all participants facilitates information sharing and mutual understanding. Meanwhile, negotiation turns to be a process of persuading and being persuaded.Its major task is to attempt persuading the opposing party into accepting one's idea, self-retained interests, and desirable behavior.

1.1.2　Definition and characteristics of business negotiation

Business negotiation is a process of conferring in which the participants ofbusiness activities communicate, discuss, and adjust their views, settle differences and finally reach a mutually acceptable agreement in order to close a deal or achieve a proposed financial goal.

Business negotiation is a form of negotiation itself. It not only presents the characteristics of common negotiation, but also the characteristics of business activities.In modern society, the range of business activities is expanding all the time.The subjects of business activities almost include everything, from tangible to intangible goods for exchange and sale.That is to say, it includes production factors such as technology, labour, capital, information, real estate and the like as well as the sales of general consumer goods and various materials.Therefore, business negotiation includes all the discussions over institutional or individual interests in business transactions.

Business negotiation falls into the scope of applied science. This discipline covers the study of the forms, principles and procedures of business negotiation, the psychological analysis of the participants, as well as the introduction of specific methods, strategies and skills used in business negotiation.In real situations, business negotiation takes on numerous forms and concerns various contents, involving different procedures and methods in different cases.The Chinese saying，“Play to the score.”well manifests the nature of business negotiation.As a negotiator, you should identify the objective of your negotiation first and then figure out proper methods and strategies to be used.Take the following cases as an example—a university plans to negotiate with a digital company over the price at which to purchase desktop LCD computers, and two large corporations talk about merger.Though both of them are business negotiation, the knowledge, methods and strategies used are different.

Business negotiation demonstrates the following characteristics：（1）The objective of business negotiation is to obtain financial interest

It is the financial interests that all parties concerned hope to gain to satisfy their need through negotiation that enable them to negotiate over a matter of common concern. In business negotiation, what the negotiators care are the cost and efficiency involved.The success of a business negotiation is judged by the satisfying financial interest gained from the negotiation.Therefore, financial interests serve the purpose of the negotiation.In another word, a businessnegotiation without any financial interests and efficiency is of no value.（2）The core of business negotiation is price

Now that the purpose of a negotiation is to gain financial interests, the measure used to show how much interest each negotiator can get is the price. And other terms, including the product quality, quantity, delivery and payment, are closely tied to it.Take a taxi company in Nanjing for example.The company placed an order of 100 Santana 3，000 sedans.The unit price for this order may differ from that of a monthly purchase of 50 sedans or an annual purchase of 600.Let's have a look at another example.The reason why air express is more expensive than ocean shipping is because the quotation includes the cost incurred to save time in addition to high air freight.As price is indicative of the profits from the sale with small margin but quick turnover, promptness and security, that makes it the focus and major issue of business negotiation.

But it should be noted that even though the price is the focus negotiators still need to leave room for concession over price. Apart from it, there are some other directly or indirectly related terms.Instead of bargaining over the price, negotiators may try to get corresponding“compensations”from other terms.The ability to focus on haggling over the price, to circumvent it if necessary and eventually fall back is a must for every business negotiator.（3）Its principle is equality and mutual benefit

The basis of any business negotiation must be equality. It is the only way to mutual benefit.In a negotiation, if one side takes the upper hand, the agreement established is most unlikely to be followed.Only the principle of equality and mutual benefit can lead to“win-win”or“multi-win”.In chapter 2，“Game Principles in International Business Negotiation”，more cases are presented to illustrate this point in more detail.（4）Items of contract should keep strictly accurate and rigorous

A business negotiation comes to a conclusion when two sides sign an agreement or a contract. The terms and conditions stimulated in the contract represent the rights and obligations of each side.These terms and conditions are expected to be worded with great accuracy, caution and prudence, which are the prerequisite for the guarantee of each side's interests.A negotiator who has reached a favorable settlement may walk into the trap of a tricky written contractset by the other side, especially when they are not careful enough in drafting the contract, failing to ensure the completeness, vigorousness, correctness or accuracy, equitability and legitimacy of the contract.Once such a“mishap”occurs, the interests nearly in their hands may get devalued, or they may be totally divested of these interests—unfortunately, the negotiation may turn out to be fruitless and their efforts produce nothing in the end.Such cases are rather common in practice.Chapter 9，The Formation of Contracts, illustrates this aspect of negotiation with both positive and negative cases.Therefore, in business negotiation, negotiators should take the written contract seriously as well as the oral commitment, with more emphasis on the accuracy and rigorousness of the former, so as to avoid being deceived or losing money but without any evidence to defend themselves.

1.1.3　Definition and characteristics of international business negotiation

International business negotiation refers to the business negotiation that takes place between the interest groups from different countries or regions. It is an important activity frequently involved in foreign trade and other economic exchange, serving a critical approach and method for these interest groups or individuals to confer together to reach an agreement or settle the issues of their interest conflicts.

In addition to the general characteristics of typical business negotiations, international business negotiation demonstrates the following features：（1）Language barrier

In face-to-face communication, or in written correspondence, one of the first obstacles encountered in international business negotiation is language barrier unless your counterpart also speaks your mother tongue and writes in your native language. English is most commonly-used language in international trade and business activities while most international trade practices and terms are expressed in English.If the other parties are not from the English-speaking countries, other languages, such as French, Spanish, Russian and Arabic may be used in negotiation.People with multi-lingual skills are viewed as a master key to international business negotiation.However, such talents are rare.A person whooften participates in international business negotiation must at least master one foreign language—for example, English.At very formal and important international business negotiations, all parties occasionally have their own interpreters, and most often hire temporary ones who know the language of the counterparts well—say, immigrants and international students.This can produce an effective communication and reduce the cost of negotiation.（2）Cultural differences

The differences in culture, customs, religion and belief among countries are greater than those of different areas in a country. These differences manifest themselves more obviously in international business negotiation.If negotiators fail to understand these differences due to different cultural backgrounds, they are more likely to encounter unnecessary misunderstandings, which may even endanger the normal negotiation.For example, when an Indian businessman is shaking his head to show his satisfaction with the features of the product you have just presented, you may be quite puzzled that he has not identified with your quality product；or after you quote a high price to the other side, the Swiss negotiators, waiting in your usual way for bargaining over it, but your counterparts may not be used to this kind of bargaining.They may think that perhaps you lack common knowledge of the prices on the international market, or perhaps you do not have real interest in this transaction.As a result, they will leave you alone.On the other hand, the diverse religious beliefs and social ideologies also have a great impact on the international business negotiation.An experienced business person must know how to circumvent the cultural barriers, try to find out common interests to get along, and deal with these differences with tolerance.If necessary, you may even cater to and compliment the opposing cultures so as to reduce the conflict or barriers produced by cultural differences, or turn these differences into an accelerator for negotiation.（3）International laws and domestic laws are both in force

The final outcome of an international business negotiation is the cross-border transfer of the object and the payment, involving not only domestic laws, but also related international business laws and international practices concerning international trade, international payment settlement/international transportation and international insurance. For example, if you are in import and export tradenegotiation, you need to master the terms used in international trade and fully understand its implications, and have enough knowledge of the laws in your opponent's country and the regulations and laws imposed by international economic organizations.Additionally, it takes time for you to learn and gain experience from the practice.Finally, an sensitive international business negotiator should be well informed of the new regulations and laws imposed home or abroad, with regard to the negotiation contents, so as to adjust the negotiating strategies accordingly.（4）International political factors must be taken into account

Within the scope of business negotiation as it is, international business negotiation is part of the political and economic relations between the countries and regions concerned. Therefore, it will often be related to the political and diplomatic relationship between these two countries or between them and the others.Assume that a company asks you to cooperate with them to start a big utility engineering project on a site under territorial dispute with its neighboring country, which may increase the risk of not only being unable to finish the project, but also inducing diplomatic confrontation.Here is another example：an importer from the Middle East asks a Chinese textile enterprise to manufacture a batch of T-shirts with words of racial or religious discrimination on them.In this case, Chinese negotiators must refuse such an offer, no matter how profitable the deal is.It is thus clear that negotiators engaged in international business negotiation must be highly sensitive to international politics.（5）The difficulty and the cost are greater than that of domestic business negotiations

Seemingly, as a consequence of the above mentioned features—that is, as far as languages, social conventions, values, legal environments and political factors are concerned, international business negotiations involve more elements and tend to be more complex than domestic ones. It is more difficult to conduct as well.Additionally, the expenditures on travel, conferences, study tours and entertainments are also higher.For example, to close a deal of an object worth a huge amount of money, we need to visit our counterpart's country and check the goods and so on；occasionally we have to go there again and again for rounds of negotiations to ensure that they have satisfying credit rating, reliable technicalstandards and efficient implement of the contract.In a sense, international business negotiation is an overall competition of knowledge, skills, perseverance and wealth.

1.2　Forms of International Business Negotiation

What international business negotiation involves is extensive and complex, which according to the main bodies, objects, forms and procedures involved in the negotiation, can be classified in the following ways：

1.2.1　Classification by chief negotiator（1）Government-to-government's negotiation（G2G's）

Two governments negotiate with each other over the issues of mutual concern like the trade of goods and services, economic and technical cooperation, large-scale construction project, foreign exchange and capital transfer, to resolve conflicts and reach consensus agreement. This kind of negotiation is usually conducted by the officers from the Ministry of Commerce and the relevant department.For some important projects, it is up to the top level of decision makers to make a final decision.Sino-US textile negotiation, Middle Europe footwear negotiation and Sino-Russia oil pipe transport negotiation fall into this category.

This category includes the negotiation between a country and an international trade organization, for example, the negotiation over China's entry into WTO and the negotiation between China and the Association of Southeast Asian Nations（ASEAN）over the establishment of“10+1”Free Trade Area. These negotiations are committed to obey the regulations of the trade organization concerned and eventually revolute to one-to-one negotiations over opening the domestics market.Above mentioned negotiations concerning the interest balance among countries are much more complicated, difficult and lasting much time than those of international business negotiations.

In addition, the negotiations between two governments over some specific cooperation projects are within this scope. For example, as the city of Shanghai in China and New York City of the US are sister cities, two municipal governmentsused to have negotiations over Trade Fairs and exchange and display of the exhibits in the museums of the two cities.Though these negotiations also relate to economic interests, their major purposes are cooperation with each other and therefore they boast a friendly atmosphere.（2）Government-to-Business'negotiation（G2B's）

When a country plans to introduce a large set of equipment, but there is a gap in this industry in the country or technical strengthen is weak, and no corresponding enterprise is qualified to do the task, government officers in charge of commercial affairs supervise the negotiation. They normally invite related experts to join them in negotiating with relevant foreign enterprise groups.While one side of the negotiation is a country, the other side is usually a large leading business enterprise group；therefore, this is also a kind of equal business negotiation.Its outcome is that technology importer pays for the imported equipment and the loyalty fee and opens part of its market to the other side for mutual benefits.Besides, the negotiation between a local government and a foreign company also belongs to this category, such as the local government purchase of vehicles and office supplies on the global market, worldwide bid for city transportation and environmental protection projects and the resources export of a special region.（3）Producer-to-Producer's negotiation（P2P's）

This negotiation usually takes place between the finished or the semi-processed goods manufacturers in one country and the parts and accessories producers in other nations. It may also include negotiations over the cooperative production project of the companies based in different countries, and cross-border mergers of large multinational manufacturers.The finished product manufacturers are often in a stronger dominant position, having the final say in the parts and accessories purchases while the suppliers usually are placed in a more passive position in the negotiation.But the parties of the cross-border cooperation are usually placed in a more equal position, or offer supplies for producing a product on the same market.A classical example is the cooperative production of the airbus among European countries such as France, Germany and Italy；or using the patent to produce identical products for different markets, such as Ford Automobile Group, which manufactures the popular FOCUS sedans in the US, and has also established joint ventures in Brazil in South America, Germany in Europe and China in Asia, producing the automobiles of the same model.（4）Producer-to-Trader's negotiation（P2T's）

Because the international division of labour is increasingly elaborate, quite a number of manufacturers focus only on manufacturing process or assembling process, unable to afford to market or sell their products themselves. Besides, they will experience many differences and barriers caused by the language, legal environment, distribution channels in foreign countries and other factors.Therefore, import and export companies or traders are the bridge between two manufacturers or between a manufacturer and a distributor.Traders serve to provide the foreign manufacturers with the raw materials and parts they need, therefore, they do not need to bother to negotiate with a great number of small suppliers.As long as the traders can provide the big enterprises with the parts or the raw materials to the specification, quantity and price they need, or as long as the traders make a quotation to the specification, quantity and price acceptable to the big purchasers, the two parties are quite likely to close the deal.（5）Retailer-to-Producer's negotiation（R2P's）

When retailing giants negotiate with foreign manufacturing companies over the purchasing, selling, commission agency, and joint venture, etc, it is usually the company with larger size and more strength that has more say in the negotiation. Multinational retailers, like Wal-Mart, Carrefour, Metro Group, with their large orders and worldwide buying networks, order directly from manufacturers all over the world to cut costs.Two household electric appliances giants in China—GOME and SUNING, which almost control 60%of the retailing sales on the domestic household electric appliances market, negotiate directly with foreign home appliances producers for agency issues as well as purchase domestic products.（6）Business-to-Business'negotiation（B2B's）

This negotiation involves the discussion between importers and exporters, wholesalers and retailers. Its purpose is to resell the goods to get profits.The two sides typically haggle over the trading items, price, quantity, quality, shipment, insurance, payment, service, cooperation and disputes settlement and so on.（7）Business-to-Consumer's negotiation（B2C's）

One side of the negotiation is representatives of a manufacturer or a tradingcompany, and the other side is the consumers from another country or other countries. Their negotiation contents are usually concerned about the quality of service and product, involving the process to confer how to inspect the quality of the product, how to use it, how to handle refund and replacement, etc.For example, in 2006，about 500 Chinese consumers approached Kodak Company, requesting it to refund them for the inferior cameras.In this negotiation, consumers are likely to be in a weak position due to the restraints of language, suing costs and negotiation costs.Nevertheless, consumers with high sense of self-protection may offset their weak position and strive to assure their own interests in various ways.They may present the invoice issued by the manufacturer or the International Quality Warranty, to the local Consumer Organization or appeal to media and public supports to defend their rights.Companies aware of their social responsibility tend to resolve this kind of dispute legally and reasonably in view of the corporate reputation and long-term interests.

1.2.2　Classification by negotiation object（1）Product trade negotiation

It is also called visible goods trade negotiation, the process in which importers and exporters from different countries confer with each other about the buying and selling of a product, the terms and conditions for the transaction, including the relevant quality, quantity, packing, price, shipment, insurance, payment terms, claim and arbitration. Import and export trade negotiations account for absolutely larger part of international business negotiation, taking on various forms.（2）Technology trade negotiation

International technology trade negotiation refers to the conferring process in which the technology transferor and the transferee from different countries discuss about the features, price, payment terms and so on of a technology or a set of equipment. A broader definition of technology trade includes the buying and selling of relevant equipment and the right to use technology patent, while narrowly defined, it only refers to the purchasing of technology and the patent and the right to use it.Technology trade negotiation tends to be more complex than common commodity trade negotiation, and involves related technicians or experts.During the validity of the patent, the transferor is usually in a favorable position.（3）Service trade negotiation

International service trade refers to the cross-border transfer of a service which does not take the form of a self-contained physical object. Service trade includes labor export, cross-border transportation, international communication, finance and insurance, tourism, advertising, medical care, film, audio-visual records, sports, technological instruction, designing, accounting, auditing, assessing, legal consultation and services, etc.Service trade negotiation can be complex, time consuming, and costly, concerning more additional clauses.Except for labor export negotiation, the seller is more likely to be in an advantageous position.（4）International project negotiation

International project negotiation refers to the process in which governments or enterprises from different countries confer about a joint venture project. It involves a joint venture, cooperation, inter-holding, inviting a bid, submitting a bid, leasing, contracting, auction and operation and other activities.For instance, Shanghai Auto Group and American General Motor Company had several rounds of talks over the issues of producing Buick and Chevlet cars in China.They discussed the proportion of shares each side would held, corporate bylaws and transfer of stocks and other concerns for establishing the joint venture.As project negotiation involves many domains and aspects, including production, marketing, market, prevailing laws and regulations in each country, it boasts to be the most complicated of all the international business negotiations：it engages the greatest number of people, the top level of complicity, the highest cost of input and the longest time of discussion.It is not uncommon that a big project takes months and even years from the initial phase of intent negotiation to the final phase of signing the agreement.

1.2.3　Classification by form（1）One-to-one negotiation

One-to-one negotiation refers to the situation in which each buyer or seller, or each party in the proposed cooperation project entrusts only one negotiator from each side to confer face-to-face and one-to-one on its behalf. These talks aregenerally informal ones about the international commodity exchange or small-scale cooperation project or formal negotiation between the top level management of two parties.Negotiators can communicate in the same language or through the interpreter, have an intimate knowledge of the international market of the negotiation object or the details of the cooperation project.They are fully prepared for the negotiation.The outcome and objective of their negotiation is clearly definite.（2）Team negotiation

Team negotiation is the one in which a negotiating team is constructed by each side to participate on behalf of its organization. In international business negotiation, most team negotiations are relatively formal, especially those concerning a large sum of money or a complex content.For example, a Shanghai printing house was planning to purchase a used Hydeburge high-speed color offset printing machine made in German.The Chinese negotiating team was composed of a vice president of production, an engineer and a manager of the import and export department while the German team included a sales manager and an interpreter.Therefore, Chinese side apparently has an advantage when the number of people, the staffing and the related knowledge are concerned.Before the negotiation, more wise ideas may be pooled to improve the negotiating plan；during the negotiation, the team members may back or complement each other, striking at the core technology and making full use of possible negotiation skills.If necessary, a final decision will be made to close the deal quickly.Of course, team negotiation involves more people and more money, especially more traveling expenses to negotiate abroad.Additionally, the failure of the team members to coordinate well with each other would affect the outcome adversely.What is worse, they may even make things difficult for each other, leading to the break-down of the negotiation.（3）Multilateral negotiation

It is also dubbed as“multi-angles”negotiation, which refers to the business negotiating situation in which negotiators representing three or more interest groups from different countries confer to reach an agreement. This negotiation covers wider range of concerns, engages more delicate personnel relations, which makes it hard to achieve effective coordination.Therefore, it is more difficult to carrythrough than other kinds of negotiations, for example, the Doha Round of WTO negotiations, negotiations over a regional“free trade area”of ASEAN 10+3 members, Ariane astronautics project negotiation between Germany, France, the UK, Italy and other West European countries.In the course of the negotiations, one or more gravity centers of interest would turn up and give pressure to other negotiating parties.The consequence thereafter may be that one or more sides refuse to cooperate, leading to the break-down of the negotiation, or the side which refuses to cooperate withdraws, leaving the multilateral negotiation less effective than expected.

1.2.4　Classification by procedure（1）Horizontal Negotiation【Case】A company in California, US, negotiates with a Japanese company over the transaction of beef export. American and Japanese sides first determine what clauses are expected to be in the contract for the beef transaction, such as the clause of beef quality, price, quantity, packing, payment term, shipment, insurance, claim and force majeure, etc.Then they begin to discuss about the quality of the product and the terms of payment.However, they have different views on price issues；and so they decide to put it aside and confer about other clauses like the quantity and packing of the beef.After they settle most clauses, they will return to the delayed issue of price terms to reach final agreement.This kind of negotiation is called horizontal negotiation which does not necessarily require to follow the sequence of the contract clauses strictly.

Horizontal negotiation refers to the conferring process in which all the issues concerned are presented first and then discussed one by one, and an issue which can not be settled at once may be skipped and settled later until all the issues are settled properly. Horizontal negotiation is widely used in diverse international business negotiations as it shows the following advantages：easy issues can be resolved first and then the tough ones.Negotiators are allowed to conduct the negotiation flexibly and quickly.And last the negotiation tends to be highly efficient.The drawbacks are that the negotiation does not follow a rigidly logical order.As a result, the outcomes of the tough issues settled later are quite likely toinvolve the terms and conditions settled earlier.（2）Vertical Negotiation

Vertical negotiation refers to the process in which we list all the issues to be discussed according to its logic and then settle them one by one in this logical order. It is characterized by the fact that if we have not resolved the previous issues and then we are unable to confer the next one.Let's take the beef export as an example again.In vertical negotiation, American and Japanese parties have to negotiate the quality and price of the exported beef first.If they fail to reach an agreement there, they would not talk about other clauses.The characteristics of vertical negotiation are rigid logic, clear sequence and outstanding key points.The disadvantages are once a tough issue crops up, the negotiation will fall into a deadlock which may delay the negotiation.

1.3　The Basic Forms of International Business Negotiation

While international business negotiation takes on various forms, fundamentally it is one of the following：

1.3.1　“Host Court”negotiation and“Guest Court”negotiation

According to where the business negotiation takes place, it is classified as negotiation as“host court”negotiation，“guest court”negotiation，“changing court”negotiation, and negotiation at a third place.（1）Host-Court negotiation

The negotiation happens at the place where we are based or at our home court.

①The advantages of the host court negotiation：

a. It saves home team the traveling expenses abroad.

b. Host team know the negotiation environment well and can be quite relaxed psychologically.

c. All the resources are readily available to the host negotiators.

d. The arrangement enables the home team to receive the direct instructions from their authority easily.

②The disadvantages：

a. Host team have to spend time and energy making arrangements for the negotiating site and reception.

b. The host team are easy to be distracted by the routine chores, which may affect the outcome of the negotiation.

c. As a host, we will arrange dinner parties, sightseeing and tours to help the guest team know more about the local culture and to build goodwill.These activities add to their negotiation cost.（2）Guest-Court negotiation

Guest court negotiation means that the negotiation is held at the location of the counterpart.

①The advantages of guest-court negotiation：

a. Traveling team can save the trouble to extend their hospitality.

b. Staying on the foreign land allows the guest to be free from distractionsand concentrate on the negotiation.

c. When problems crop up, the traveling team has sound excuses or room to manoeuvre（for example lack of sufficient literature and personnel, etc）.

d. If necessary, the guests may ask to negotiate directly with the supervisor of their rivalries.

②The disadvantages：

a. The traveling team incurs high lodging and traveling expenses.

b. Fatigue over the trip and lack of knowledge of the working environment may have a delicately physical and psychological impact on the members of the traveling team.

c. Time differences and communication barriers make it difficult for the guest team to contact their supervisors.

d. It is inconvenient for the traveling party to get information, literature and personnel support.（3）Changing-Court negotiation

When an international negotiation concerns a large mount of money and demands more time, the location of the negotiation is usually arranged at the host court and guest court in turn in order to balance the advantages and disadvantages between negotiating solely at the home court and solely at the guest court, and to improve mutual understanding in terms of culture. Negotiating as a home team and traveling team in turn enables each side to benefit from the advantageous position as a host and share the traveling cost equally.To some extent, this arrangement provides a balanced base for negotiation and makes it sound fair as the procedures are concerned.（4）Third-place negotiation

The location of a third-place negotiation is neither a host court nor a guest court. It is a location in a“neutral”country or a“neutral”area.In effect, both sides are traveling teams.

Third-place negotiation is chosen when two sides have severely contradicting interests. Therefore, the relations between them are rather strained and the disputes over their interests are delicately subtle.No one is inclined to concede their proposed interests willingly, and they even think that if they go visiting the country of their counterpart, they will give an impression of weakness.

①The advantages of the third-place negotiation：

a. Choosing a place acceptable to both sides helps to build an objective and rational atmosphere for the negotiation.

b. Both sides attach great importance to their own image, reputation and etiquette.

c. All negotiators are easily free from distractions.

d. The negotiation would not be delayed without an end, and at least both sides would like to see some progress big or small made in this round of negotiation.

②The disadvantages：

a. The cost of the negotiation is increased.

b. It is inconvenient to get information, technology and personnel support.1.3.2　Oral negotiation and written negotiation

The negotiations presented above are almost oral ones；however, international business communication involves distance in time and space. To increase the efficiency and cut the cost, many negotiations are carried out in written forms.Oral negotiation and written negotiation are distinguished from each other in terms of the language used in communication.（1）Oral negotiation

In oral negotiation, negotiators from each side talk with each other face to face or over the telephone. Host-court negotiation, guest-court negotiation and third-place negotiation mentioned above all fall into this category.The simplest one takes place at the trade exhibitions, which may be held either at the host court, or guest court, or third court.While negotiators look at the samples, they confer the terms and conditions for the transaction and therefore tend to conclude a deal quickly.

①The advantages of oral negotiation：

a. Negotiators can explain amply the terms and conditions of the contract in person, answer directly the questions raised by the counterpart and even present literature of the samples or exhibits to help the counterpart to decide whether to close the deal.

b. Face-to-face negotiation enables the negotiators to examine the facialexpression and gestures of their counterparts and understand their psychology so as to apply various negotiating techniques.

c. It is quick to obtain relevant information and adjust the negotiating strategies.

d. Seeing is believing.Oral negotiation（especially face-to-face）dispels the sense of distance and strangeness and increases sensibility which in turn makes the negotiation more fruitful.

②The disadvantages：

a. There is a little room to maneuver.Making decisions about whether to close the deal or not in a short period of time tends to result in lapses because it is impossible to make a through consideration in a great hurry.

b. There is a heavier psychological pressure.If the negotiators from the other side are new to us, they may produce psychological pressure upon our side.In particular, when we are in the guest court or third place, uncertain of the background, personality, cultivation and power scope of our rivals, we are quite likely to suffer from duel psychological pressures, which affect the negotiation adversely.

c. The atmosphere is widely changeable.In face-to-face negotiation, apart from the impulsive nature of oral words, foreign language used by one or both sides may also bring about misunderstandings, which, with the additional tense atmosphere, often makes the negotiators express themselves abnormally and behave excitedly, leaving the negotiation in passive and awkward condition.

d. If we negotiate face-to-face abroad, we have to incur heavy allowances for business trips.

e. Oral negotiation is not appropriate for the first deal, large-volume deal and cooperation project.（2）Written negotiation

Written negotiation means that participants in the negotiation confer contractual clauses by means of letters, telegraphs, faxes, e-mails and other written forms. The cost involved is relatively low and the expressed viewpoints and suggestions are formal, usually offered after careful consideration.What is more, printed materials are easy to keep.Under many situations, the documents exchanged during the negotiation may serve as a major part of the final formal agreement.Therefore, written materials of the negotiation are regarded as carryinglegal force.

Take international trade negotiation through correspondence as an example. The buyer's or the seller's letters of offer, counteroffer and acceptance may all be viewed as formal terms for contract.Once sent, they cannot be easily modified or withdrawn during its validity period.

①The advantages of written negotiation：

a. Low-cost.The only expense is communication fee, and thus traveling expenses and allowances for foreign business trip and entertainment expenses are greatly reduced.

b. Convenient.

c. Unhurried or unflustered.Within the time limit for a reply, there is ample time to think it over.

d. No restrictions on the rank or status of the negotiator.Negotiators do not meet each other in person, free from psychological pressure and discomfort with the unfamiliar conditions.It is convenient for each side to communicate with their supervisor to make decision and close the deal.

e. Easy to keep.

②The disadvantages：

a. Written business correspondence tends to be simple and concise, and therefore sometimes it would lead to misunderstanding, resulting in disputes or conflicts.

b. It is difficult to notice the changes in the counterpart's facial expression or psychology, which discourages the use of negotiating skills.

c. It is subject to the restriction of the communication facilities.Once the communication equipment or lines break down, the two sides will lose contact with each other and bungle the chance to conclude the transaction.

In reality, no hard and fast line can be drawn between the oral and written negotiation. For example, when one side obtains the information of the other side's need, it provides the information and the quotation of the desirable product.Only after exchanging letters several times and having the intention to do business together, the two sides agree on a face-to-face negotiation to sign an agreement；or after the two sides first meet on a trade fair and have a preliminary face-to-face talk about the product one side is interested in, both of them or one side return homeand they keep on negotiating and confirming each term and condition of the deal, during which they may also phone each other and communicate orally about the details beyond the written words to reach a final agreement and sign the contract.

1.3.3　Formal and informal negotiation【Case】The purchasing manager from SAT, an African company, happened to meet the sales manager of a Guangdong company at China Guangdong Export Fair（Fall）. The manager of SAT company was very interested in the electronic alarming system made by a Guangdong company.The two managers had an initial talk about the features, performance and the output of the system.The Guandong company invited SAT manager to visit its factory in Shenzheng and have a formal negotiation in its headquarters in Guangzhou.Finally, SAT and the Guangdong company closed a deal of exporting 2000 sets of electronic alarming systems to South Africa and signed the contract.This is a typical example of an accidental spontaneous talk which turns out a prepared and formal negotiation.（1）Formal negotiation

Formal negotiation is also called prepared negotiation, in which both sides are fully prepared for the issues to be discussed and the central contents of their negotiation are directly related to the interests of both sides. Formal negotiation may come to a conclusion only after one round of negotiation or reach a consensus after several rounds and finally sign an agreement；or perhaps the first talk breaks down, or even after several rounds of negotiation, it still has to end in failure.（2）Informal negotiation

Informal negotiation refers to the talk before the formal one in which negotiators of lower ranks discuss about the central issues of the negotiation, the size of negotiating team and the negotiating process, etc；or on informal occasions, negotiators of high ranks from both sides have a preliminary talk about what they are going to negotiate in order to make a full preparation for the afterward formal negotiation or set the right tone for the formal negotiation later.

Informal negotiation includes accidental and intentional negotiation：

①Accidental negotiation refers to the negotiation that takes place by chancewithout a definite intended counterpart in mind before it starts.The case above concerning the negotiation between the South African client and the manager of the Guangdong company when they met each other by chance at the Guangdong Fair falls into this type.

②Intentional negotiation is an initial-contact and exploratory talk or a talk held in preparation for the formal one.It does not necessarily get everything ready for the issues and contents of the formal negotiation, but mainly offers information, explains positions, establishes relationship and makes arrangement for the procedures of the next negotiation.

Informal negotiation has the following three characteristics：

a. Time is limited.

b. There is little preparation.

c. It is not very difficult.

Summary

1.Negotiation is a conferring process to eliminate conflict, adjust relationship, satisfy each other's need and maintain each other's self-interests.A negotiation must involve two or more participants and have a clear objective.It is a conferring activity on an equal basis and a process of communicating, discussion and persuasion to reach a consensus after each side makes concession.

2.Business negotiation is a process of conferring in which the participants of business activities communicate, discuss, and adjust their views, settle differences and finally reach an acceptably satisfying agreement in order to close a deal or achieve a proposed financial goal.Business negotiation covers the exchange and sale of almost everything from tangible to intangible goods.The objective of business negotiation is to gain economic of financial interests.The core of negotiation is the price with equality and mutual benefit as its principle and rigorousness and accuracy as its key.

3.International business negotiation refers to the discussion process between different interest groups from different countries or regions to complete a cross-border transaction.Any negotiation of this kind will be complicated and difficult due to the differences in languages, cultures, laws and politics involved.International business negotiators must have a good command of foreignlanguages, accurate and exact expertise, extensive knowledge of cross-culture communication, sensitive mind to the international politics, strong character or mentality, a firm and indomitable spirit and relevant negotiation skills.

4.Due to different major participants, International business negotiation may be divided into the following types：government-to-government, government-to-enterprise, producer-to-producer, producer-to-trader, retailer-to-producer, trader-to-trader, business-to-cosumer negotiation between different countries.

5.As far as the subject for negotiation is concerned, international business negotiation is classified as import and export goods negotiation, international technology trade negotiation, international service negotiation and international cooperation project negotiation.As the forms are concerned, international business negotiation may be one-to-one, team-to-team, and multilateral.Or international business negotiation is a horizontal or vertical one according to the extent the negotiation concerns.

6.Though international business negotiation takes on various forms, they all fall into one of the following three basic categories：（1）host-court negotiation vs guest-court negotiation；（2）oral negotiation vs written negotiation；and（3）formal negotiation vs informal negotiation.

7.In real practice, there can not be such a line that clearly isolates one form of negotiation from another.For instance, two sides might act as host in turn during the negotiation, or choose a neutral location；oral negotiation and written negotiations are held alternately；informal negotiation can develop directly into a formal one, or two sides straightforwardly start with formal negotiation.

8.Time, location, people and subject matter should be taken into consideration in choosing the approaches to negotiation.Negotiators should not be rigidly formalistic.Instead, they should remember their goal is to reach a mutually acceptable settlement.

Key words and definitions

1.Negotiation：a bargaining situation in which two or more players confer with each other to resolve conflicts, coordinate relations, meet each other's needs and maintain self-interests.

2.Business negotiation：a process of conferring in which the participants ofbusiness activities communicate, discuss, and adjust their views, settle differences and finally reach an acceptably satisfying agreement in order to close a deal or achieve a proposed financial goal.

3.International business negotiation：the discussion process between different interest groups from different countries or regions to complete a cross-border transaction.

4.Horizontal negotiation：the conferring process in which all the issues concerned are presented first and then discussed one by one, and an issue which can not be settled at once may be skipped and settled later until all the issues are settled properly.It is characterized by flexibility, fluidity and high efficiency with easier issues resolved first and then the tougher ones.

5.Vertical negotiation：the haggling process in which all the issues to be discussed are listed according to their logical relations and then settled one by one in this logical order.It is characterized by the fact that if the previous issue has not resolved the next one is unable to be discussed.Vertical negotiation tends to have its focus stand out and logic.

Case Study

When he was 27 year old, Lu Weiguang, a graduate from Dalian University of Technology, resigned determinedly from his post in the government agency. With a startup of 300，000 RMB borrowed from his family, he established Anxin Floor Board Company and began to do floor board business.It only took him three years to complete the primitive accumulation of capital and then set up a factory to manufacture floor boards in Shanghai, from a board dealer marching into the board manufacturing industry.Just as he planned to expand the production scale further, a regulation was imposed in 1998 by the government to ban deforestation in China.Thus, the domestic source of lumber was terminated.

Reluctantly, Lu Weiguang had to turn to overseas markets, but Taiwanese traders controlled the major oversea supplies of the board raw materials. During the negotiation for lumber import with these Taiwanese business people, Lu Weiguang found that a great part of the board raw materials traded by the Taiwanese business people came from Brazil, which was abundant in forestry resources.To circumvent their control over the quantity and price of timberexport, he decided to look for the source of supplies and preferably negotiate a contract for purchasing a forest direct with the local people so that he would have his own resources and dominance in operation.However, the vast virgin forest in Brazil was almost all under the control of local Indians, who governed by their own laws.Business of large volume with them must be consented by their chief.

With a local interpreter and guide he hired, Lu Weiguang ventured into the Brazilian virgin forest. Quite unexpectedly, his first request to buy a forest was tuned down by the head of the Indian tribe.However, this Chinese businessman did not give up readily.Fully and mentally prepared, Lu Weiguang decided to adopt indirect ways.First, he made friends with the head and established goodwill with him.Additionally, he offered daily necessaries, which they were short of, and helped them set up schools.To make them no longer feel worried about their valued forest resources, he took actions and invested to develop fast-growing trees with Indians.After his painstaking efforts, he induced all the Indians—from their head, to the old and the weak, and to the women and the children, to understand that this Chinese did not come to take away their resources, but instead made friends with them on an equal basis and offered them help, and additionally developed a long-run plan to restore their forest resources.

In the new rounds of formal negotiation, the chief of the tribe finally agreed to Lu Weiguang's request of purchasing a forest. He made two purchases；the size of the forests he bought totaled 1，000 square kilometers, making him the first Chinese man who ever owned Brazilian forest and also a foreigner who owned the largest forest in Brazil.

Discussion questions

1.Why did Lu Weiguang go international？What barriers did he overcome？What forms of negotiation did he use when he bargained with the chief of the tribe？

2.What is the connotation of business negotiation？

3.What are the characteristics of international business negotiation？

4.What are the manifested forms of international business negotiation？

5.What is horizontal and vertical negotiation？

6.What are the advantages and disadvantages of“host-court”negotiation and“guest-court”negotiation？

Chapter 2　Game Principles of International Business Negotiation

Key Points：

1.Game principles of negotiation

2.The intention of equality and voluntary

3.Negotiation Strategies of seeking common ground while maintai-ning differences

4.Eight crucial elements which influence the negotiation【Preview Case】Germany and Japan were the first two countries that had maglev train technology at the turn of the century. In 2000，China planned to bring in German technology and equipments, which were relatively simple to operate and incurred low management cost, to build a 30-kilometer-long maglev traffic line connecting downtown Shanghai to Pudong International Airport.Negotiation for introducing the technology was conducted between the Shanghai government and a German negotiating team, composed of representatives of Germany Thyssen Maglev Company, Krupp Company and Siemens Company.The Chinese side was ready to buy the ownership of the vehicles, maglev train guideways, propulsion systems and the relevant patented rights.The four parties agreed to form a company to run the world's first commercialized operational high-speed traffic line of maglev rail train, and to share the profits and losses proportionally.Since this was a commercial cooperative project with state-of-the-art technology, there was no precedent for this, no reference prices, and even no such word—no formal English name for a

magnetically levitated train—in the dictionary！But all the parties stuck to the principles of sincerity, equity, mutual benefit, objectivity and flexibility so that the negotiation proceeded successfully. It took only several months from the time the decision to introduce the technology was made by the Premier of China's Department of State after his visit to observe the Maglev train system in Germany in June，2000，to the formal inception of the project in March，2001.Then, what factors contributed to the successful settlement within such a short period of time of this multilateral cooperation agreement to introduce such a complex and brand-new technology？Apart from strong support from the two governments, it was crucial that all the parties followed the game principles of negotiation in a trustworthy, dependable manner.

The game principles of international business negotiation, which are also called fundamentals or guidelines of international business negotiation, are the basic rules, beliefs or norms accepted in international business negotiation that all participating parties are obliged to observe. Understanding and implementing these principles help negotiators better apply negotiating strategies and skills and increase the effectiveness and efficiency of their negotiations.

2.1　Equal and Voluntary Participation

Equal and voluntary participation are basic premises for international business negotiation.

2.1.1　All parties, big or small, should be equal

In international business negotiation, all parties must be equal participants and be willing to participate in it, no matter how great the gaps are in their economic power and organizational scale. This is the so called“equal and voluntary participation”principle.

This principle also reflects that participants in negotiations have the same option for choosing the trade items and terms. Only through equal talk and consensus may an agreement be reached and be followed by all the parties.

Admittedly, negotiation practice includes situations in which the more powerful party makes fewer concessions while the weak one makes more, which was the case with the cooperation between Boeing and Chengdu Aircraft Company. The Chinese side intended to bring in a package of airliner production technology, but, after negotiation, China realized that apart from some minor technologies, most of the patented technologies would not be transferred by the American company.Even if some technologies could be transferred, they were limited to the rights of use, which were rather expensive.Meanwhile, the American company intended to sell planes directly to China, but China insisted that opening this market be timed to coincide with the technology transfer.In this situation, Boeing proposed that they could transfer the technology for assemblingvertical fins.Though China realized that this was the least technical of all the plane production techniques, it represented an opportunity for an initial trial with Boeing.Under this agreement, China did not need to pay for the patent with foreign currency.They would get the right to assemble the vertical fins of large jetliners and gain the assembling fee.On the other side, the Americans paved their way to possible large orders from China in the future at the lowest cost—by transferring only the least important technology and paying a minimal assembling fee.

2.1.2　Veto power embodies equality

In international business negotiation, no situation exists in which one party is entitled to make the final decision or the minority must be subordinate to the majority. All parties have the power to veto any clause under negotiation, and so no agreement will be achieved if either party is not satisfied.It is the veto power that offers all parties the same position.In the above case, if China had refused to assembly only the vertical fins or the Americans had refused to allow assembling any part in China, then the negotiation would have broken down and ended in failure.

2.1.3　Respect embodies equality

All parties concerned should show respect regardless of their power and size, being careful to avoid showing discrimination or disdain to their counterparts. Although Boeing was powerful, it needed China's big orders for airliners, so it had to consider China's request for technology transfer.Chengdu Aircraft Company itself was less powerful, but it had a China's big market behind it.Therefore, it did not need to be servile to the American company.If any party abuses its power and bullies others, the negotiation will fail.

2.1.4　Voluntary agreement embodies equality

Voluntary agreement means that all parties can participate in the negotiation willingly and make their own decisions. They negotiate to pursue their own self-interest, not doing so under external pressure or against their own will.Only ifyou are willing can you be equal, understand one another, make concessions, and finally reach a mutually beneficial agreement.If Boeing insisted on not transferring even the simplest assembling technology, or the Chinese company forced Boeing to transfer the whole technology package, the result would have been that the forced party would withdraw from the negotiation and terminate it.In fact, because the Americans were not willing to transfer all the technology, the Chinese side found that the assemblage technology was not enough to enable them to produce their own aircraft, and they got only a minimal processing fee；therefore, after assembling vertical fins for several Boeing 737 airliners, the agreement was terminated without further consideration.

In International Business Negotiation, great differences may exist in participants'interests, concepts and behaviors. There are apt to be discrepancies involving many issues.So it is not at all surprising that such divergences burst into fierce disputes.Only under the game principle of equal and voluntary participation will no party be able to act against the other party's will and force his own will onto others.When problems arise, using a conferring approach enables negotiators to achieve success.

2.2　Credibility First

In 2002，Changhong Biological Technology Company, owned by Li Ka-Shing, decided to go public to finance its business. Although its turnover was reckoned in only hundreds of thousands of Hong Kong dollars and the company was suffering from losses, more people than expected subscribed for their stock when it was issued.Hong Kong peoplerespected Li's reputation, and believed they would not lose money if they invested in Li Ka-Shing.

In the same year, Zhou Zhengyi enlisted Core Pacific-Yamaichi International（Hong Kong）Limited, an international investment firm, to assist him in purchasing a Hong Kong public company, in whose name or“shell”he could go public quickly. After repeated setbacks, Core Pacific-Yamaichi Company found a“shell company”—Shanghai Real Estate Co.，Ltd, which had a net asset of several billon yuan in cash.However, after going public in its name successfully, Zhou didn't pay the several-thousand-yuan commission.The chief consultant of the Investment Company passed on a message：being such an untrustworthy man and failing to keep his word, Zhou was doomed to failure sooner or later.What he said came true in less than two years.

Among Li's strengths in making money, his behavior as a man is the most praiseworthy. Li intended to sell 10 percent of the stock of the Hong Kong Electric Co.，Ltd.he held in London.But the financial reports published later showed that the Hong Kong Electric Company would generate a big profit.His assistant suggested that he postpone selling so that he could sell it at a better price.However, Li insisted on the announced plan.Li said that it was better to leave some benefits for the buyers and then it would be easier for them to issue additional stock in the future.Making money is not difficult；the great difficulty comes with the maintenance of the good reputation.

A vivid analogy was drawn between Mr. Li and Mr.Zhou：faced with the same profit, Li may want to take 90 percent while Zhou wanted 110 percent or even 150 percent.Zhou came a cropper as a result of his greed and untrustworthy behavior.

One can not establish himself or herself without personal integrity. Being sincere and keeping one's words are the basis of mutual trust in international business negotiation.

2.2.1　Understanding derives from credibility and trustworthiness

In international business negotiations, being credible and trustworthy does notnecessarily mean revealing your objectives and plans directly and totally, but it does require saying frankly what the other party wants to know and ensuring his or her satisfaction. It is also essential to present your intentions in a proper way at a proper time（earlier announcement may make others underestimate your business while late presentation may be perceived as a symbol of your insincerity）.In the negotiation with Boeing, the Chinese side indicated that it would like to cooperate with Boeing so as to learn technological developments in modern jetliner production, but that they would not try to turn out large jetliners themselves all at once or become the American company's rival.The American negotiators also said sincerely that in order to retain their competitive advantage, they could not transfer all the airline production technology, and that even if they transferred part of their technology, the cost should be high.That meant that assembling a plane in China would be more expensive than importing one from America.It would not be profitable to China.Therefore, under the likely premises, transferring part of the technology basically considered both parties'interests and needs.

2.2.2　Credibility enhances trustworthiness

Another effect of being honest and credible in international business negotiation is that a sincere attitude helps to remove psychological barriers and suspicion, laying a solid foundation for mutual trust.【Case】A modern agricultural park, located in Shanghai's suburban areas, wanted to bring in a set of advanced Greenhouse soil-less agriculture system for growing vegetables. In the negotiation with Israeli representatives, the representatives from the Shanghai agricultural park pointed out that compared with other countries'systems, they felt Israel's had some advantages, but the price was too high to be acceptable.In addition, they worried that the transferred equipment might be second-hand, and so they hoped that Israel's transfer of this technological equipment should be based on the premises of a brand-new set at a competitive price and with a quality guarantee.Israel indicated that they were more concerned about stabilizing their market share rather than the price.In view of this situation, China promised that if Israel could transferthis technology to the agricultural park at an acceptable price, China would sell the future vegetables grown in an environmentally friendly way in China mainly to Shanghai city proper, the luxury hotels on the periphery of the city, and large supermarkets of joint ventures there while a small part of these vegetables would be exported to Japan and Korea, all of which would not threaten Israel's European and American markets.Israel promised they would not supply second-hand equipment and the technology would be guaranteed to be the most advanced in the world.In addition, they would provide technical support in the future.As a result, Israel's benefits were not injured and China's technical standard was assured, and thus the two parties eliminated all former doubts and concluded their negotiation successfully.

2.2.3　Be aware of the level of the counterpart's credibility

Business negotiation should follow the principle of sincerity, but that does not preclude using strategies and techniques. This relationship can be compared to that of strategic guidelines and tactical methods.Of course, all the parties should be reliable and trustworthy which is the basis of negotiation；there should be mutual personal trust among all the counterparts.If one side makes efforts to behave sincerely, but the other side does not, or makes it difficult for its counterparts to figure out its genuine intentions and goals, or even goes back on or breaks its promises all the time, then it will be suspected that the latter lacks sincerity in the negotiation.As a result, its personal credit standing will be downgraded；that is to say, the insincere negotiators simply tell their counterparts that they are playing tricks and it would be better to stop the negotiation with them.Therefore, we should understand quickly how sincere and trustworthy our counterpart in the negotiation is.We should also notice that people from different countries have different negotiation styles, and different dispositions, which may influence our ability to judge their sincerity and trustworthiness.We should try to eliminate these interfering elements through common sense and experience, avoiding unnecessary misunderstanding and losses.

2.3　Mutual Reciprocity and Mutual Benefits

Strict interpretation of the law leaves no doubt that Manchester United Club obviously violated the contract. However, the Brazilian player found that the club did have problems with their cash flow, and the club did not intentionally delay payment to its players.If the player had not taken the club's interests into consideration as well as his relationship with the club and had resorted to the law, the two parties would have been in an adversarial situation.So the player decided to negotiate with Manchester United Club.He proposed to revise the contract for their mutual benefits.The deadline of the annual payment of one hundred million pounds stipulated in the existing contract would be altered so that the payment would be made four times within two years at a rate of 25 million pounds at a time.In this way, the Brazilian player had 25 million pounds per half year, so he need not worry about his living, and Manchester United Club alleviated their difficulty in capital turnover.

If the player had turned to the court for help, he would have won the lawsuit, but he would have got nothing in the end. The reason was clear：because Manchester United, which had sunk deeply into debt, could be penalized legally for late payment and consequently would have slipped into worse financial condition or would have eventually gone bankrupt.That would be the worst case scenario for both parties.But they modified the contract, which not only maintained Manchester United Club's reputation and secured backing from more businesses, but also ensured the player's income.The results, satisfactory to both parties, clearly embodied the game principle of mutual reciprocity and mutual benefit.

Mutual reciprocity and mutual benefit is the goal of international business negotiation.

2.3.1　Interests first, position second

No matter what scale it is, no matter what form it takes, an international business negotiation is centered on pursuing the interests of each party. While you stick to the game principles as premises, however, you must be prepared to be flexible：do not hold your position doggedly and never give up.In fact, behind any position in international business negotiation lies distribution of business interests.No conflicting interests, no need for negotiation.Therefore, negotiation must be arranged around the central goal of gaining realistic interests：try hard to eliminate the discrepancies in commercial interests, while avoiding becoming entangled in positions.Focusing on interests rather than positions is a golden rule and precious precept in negotiation at all times and in all countries.

2.3.2　Bargaining over position, a taboo in negotiation

Since behind positions stand interests, then why not take a position and defend it against attack without fail？The answer is definite：international business negotiation is affected by many uncertain factors which are hard to fathom. In addition, gaining interests is not one-sided wishful thinking.Bargaining over positions will breach the following negotiation taboos：（1）Violating the equal negotiation game principle

In order to defend one's own position, negotiators may ignore the other side's actual situations and interests, and insist on fighting foes for every inch of land and grabbing every ounce of gold, resulting in a lengthy negotiation without results, and damaging the relationship. In such a situation, agreement is hard, if not impossible, to reach.In the WTO Doha round, which centered on agricultural issues, all parties insisted on its own positions and made no concessions, and so it lasted five years without any outcome.This is a perfect example of this principle.（2）Sabotaging the harmonious atmosphere

If all parties announce that their positions can not be changed, then the negotiation process will turn into a war of wills. As a result, one party or anotherwould have to make a great sacrifice to reach an agreement.Therefore, the negotiation fails.（3）Hiding a snake in the grass：intending not to honor an agreement

If one side is very calculating about their own profits, the other side may gain few of its interests and sign the contract reluctantly. In the future, they may breach the contract with numerous excuses.Conversely, one side may be induced with attractive benefits and be unaware that the contract has hidden pitfalls.Only after signing the contract may they realize what's happening and then they will refuse to honor it.

The ultimate goal of international business negotiation is to satisfy the participants'interests in business transactions. During the negotiation, each side should find opportunities to make its counterpart fully understand and consider its interests；at the same time, it also needs to understand and be concerned with the counterpart's interests.Only when all the concerned parties'interests are put into the negotiation plan and proper solutions are actively pursued can we have win-win or multi-win negotiation outcomes.This is what has come to be called the principle of mutual reciprocity and mutual benefit.

2.4　Maximizing Commonalities and Minimizing Differences

Seeking common ground while reserving differences is a bridge to success in international business negotiation.

2.4.1　Seeking common goals

In the above case, both Chinese and European companies obeyed the game principle of seeking common ground while maintaining differences, putting the relatively greater discrepancies aside, and starting from their mutual interests. Their negotiation was quite constructive and proved successful after a consensus was reached.

In international business negotiation, there are always conflicts or discrepancies between all the parties and their interests. In the case, the Chinese negotiators intended to bring in the production technology of three best-selling high-priced and moderate-priced models of sedans as well as roadsters and jeeps in order to gain a high position in the Chinese high-and-moderate-priced car market.Bringing in this technology proved too difficult and costly.This was not compatible with the Chinese target interest.So the Chinese negotiators decided to use the principle of“easy issue first and difficult one later”and the principle of“be weak but win the negotiation with the powerful”.Firstly, they brought in a sedan model with mature technology which incurred lower transfer cost, to achieve their target of occupying a higher place in the market quickly.Considering the overall global strategy, the European firm didn't want to play all of its trump cards at one time—transfer the whole technology.They worried that this would have a detrimental effect on their whole profit pattern.Furthermore, as far as market is concerned, they thought of China as a new market in her infancy with limited demand for high-quality cars.And as for production, China did not have the experience of producing high-quality cars.If any problems arose in the productionprocess or the finished cars, it could ruin the reputation of this famous brand.However, the European company also was aware that international automobile giants—U.S.General Motor Corporation, German Volkswagon, Japanese Honda and the like, which had entered Chinese market first, now had earned high profits.So giving up this new large potential market could have an adverse impact on the company's development in the long run, but setting up production line in China and mass-producing one elementary model sedan would not only satisfy China's demand for this brand car but also empower the export of other cars under its banner.

To launch the world famous brand sedans in Chinese market quickly at the lowest cost was a common objective of both parties which was identified after several rounds of negotiation. In order to achieve this great goal, disagreement in other issues could be postponed.

2.4.2　Abandon minor points

Business negotiation is a consultation in which common interests are sought and identified. Since all parties have chosen to sit together for negotiation, it means that they all have common interests；their need to communicate back and forth indicates that they must have different interests and goals which they would like to seek through negotiation.Therefore, negotiators should cling to the principle that the most important objectives and the negotiating criteria should be identical and the minor discrepancies and disagreements can be temporarily ignored if they do not affect the accomplishment of the major goals.That means, in order to advance the“shared interests”，we should reconcile the differing interests which are not particularly beneficial to us, and allow them to exist in the negotiation agreement.For example, in the negotiation for bringing in advanced car production technology, the Chinese company agreed to negotiate about the introduction of other car models after a few years.Actually, this meant the overall arrangement of this brand's introduction into China—the“mega-commonality”—was made first；and the“minor differences”，the impossible early launch of other high quality sedans in China, was omitted temporarily.This finally resulted in a successful negotiation.

2.4.3　Compromise is the mother of success

No matter whether it is a negotiation in which two parties have big differences at first, or one where they try to play up their offer using inducements as a negotiation strategy, negotiators have to go through a process of not only seeking mutual gains but also making concessions. This process of identifying shared interests actually involves the negotiators in making compromises one after another.Only through concessions can the discrepancies be eliminated.As the saying goes，“necessary concession is the mother of successful negotiation and seeking commonalities while reserving differences is the vehicle for breaking up negotiation deadlocks”.Of course, the negotiation concession doesn't mean yielding all along.To keep your bottom line and give up some minor interests for achieving the main target is necessary and requisite.Therefore, it is believed that, the process of negotiation is a process of making concessions, but what can be compromised on should be decided first and concessions must be made at the right time, avoiding unnecessary sacrifices.

2.5　Speak on Good Grounds

Speaking on good grounds is a most powerful talisman in international business negotiation.

2.5.1　Facts speak louder than words

In international business negotiation, no matter whether you are the host or not, no matter how powerful you are, or whether your counterpart is a big famous group while you are only a small company in a developing country, you must list data and facts and convince people by sound reasoning if you want to ensure your benefits, eliminate your counterpart's doubts and refute their objections.

In case A, Shanghai Yaohua Glass Factory learned that the patents for the technology which would be sold to them by Pilkington, had expired on 51 items and some others would expire soon, so they forced the other party to reduce their asking price to a great extent. In case B, if Chinese side had only praised their products'excellence, others would feel apathetic as expressed by the saying“the old woman of the king sells melons, and praises the goods she sells”.It was far better to give an example of this industry being successful in their own country, where it was the leader and the importer of our products made a good profit.That proved the value of our products in their market and reassured the buyer that they would have no problems.

2.5.2　Using objective criteria【Case】In an international conference of the Law of the Sea, India and America had a dispute over the issue of whether a marine mineral deposit exploration company should pay an initial fee to the country which owned the resources. Because the exploration of the deep sea mineral deposit demanded high-level technology, equipment, experts and management, only developed countries usually have the abilities to engage in such business.Developing countries are restricted in many of these aspects and have to rely on developed countries to explore marine resources in their sea areas.Therefore, India, which represented developing countries, proposed that the ocean exploration company should pay 6，000 dollars as the initial fee to the host country for every area they explored.America, which represented developed countries, strongly opposed this proposal.The two parties had a fierce debate, but neither was able to persuade the other side.The meeting lasted a long time without any result due to this problem, and was forced to adjourn in mid-negotiation.

At this moment, one representative said there was an economics essay about deep sea mining published by the Massachusetts Institute of Technology in America. In this essay, there was a model which was used to calculate the effects of various charges on the exploration profits.It was suggested that the negotiators consult this model.Having examined the model and the data, all the representatives thought that it was a model with objective criteria.The result they reached after their calculation based on this model showed what impact India's demand for an initial fee could have on the exploration company.If the exploration company should pay first when they wanted to explore, this expense might result in some difficulties in normal operation.But the initial fee would finally be added to the cost of the product, and then transferred to the price.Therefore, from the long-term point of view, the exploration company would not be affected greatly.In the light of this information, Indian representatives reconsidered their suggestions, and decided to reduce the initial fee.The Americanrepresentatives also realized that the initial fee was not unacceptable, so they no longer refused to pay such a fee.

Why was it possible for the model from America's Massachusetts Institute of Technology to settle the disputes？It is because the model exemplified the effective, equitable and scientific aspects of objective criterion. When negotiators find themselves debating endlessly about one specific piece of data, they should consider bringing in an acceptable objective criterion, which should conform to the following three requirements：（1）It should have objectivity independent from the subjective will of all parties（2）It should be legitimate and operable（3）It should be authoritative and scientific

Surely, different negotiation subjects and specific negotiation clauses involve different criteria and considerations. For example, when two business people haggle over the price of a commodity, the criteria for the price are varied：its market price in the exporting country and/or the importing country, its price on the international market, and/or other elements, including the cost of the product, trends on international market, foreign exchange rate movements, rivals'offers and so on.Besides, experts'opinions, agreements between countries, routine international practices and legal practices of a country or an international organization, can all be viewed as objective criteria.

2.6　Separate the People from the Problem

Separating the people from the problems is the principle that may bring negotiators to their senses in international business negotiation.

2.6.1　The relationship between the negotiators and the negotiation

Business negotiation itself is an enterprise of cooperation. Only when you separate the negotiators from the negotiation can you make no mistakes in judgment, and this may affect the negotiation outcomes.

In international business negotiation, no matter which country they come from, the negotiators are people first. Just like all people, they have emotions, needs, values, personalities and temperaments.Thus, three situations could develop in negotiation：

First, the negotiation may proceed successfully. As time passes, the parties establish a relationship of mutual trust, understanding, respect and goodwill.Psychology explains that when people are happy and feel comfortable, they tend to be willing to make sacrifices to help others.The same holds true for business negotiation.That means that when the negotiators are feeling happy and comfortable they are also more willing to put themselves into the shoes of the other side and will make concessions more easily.

Second, the negotiation may end in a deadlock, or stalemate. The negotiators are inclined to act impulsively, blaming, complaining and expressing hostility toward each other in their speech.Psychological research shows that in this situation, disputes always turn into personal attacks and antagonism as people try to keep face.As a result, the negotiators are prone to stray from thenegotiation subject.Thus the negotiation is prolonged and fruitless, resolving no problems at all.

Third, one party may tend to become agitated, making angry outbursts and even launching an attack in offensive language as a means of defense when they fear that the other side proposes a demand with the deliberate intention to do them great harm；or when their nationalistic feelings are offended. Such assumptions, emotions, and responses will damage the negotiation atmosphere, often irreparably.

In each of these three situations, the negotiators fail to separate the people from the problem under negotiation. They confuse the relationship between the people with the problem itself, either dealing with them both in a“soft”way or dealing with both a“hard”way.In fact, as a negotiator with a great vision in mind, the representative should seek a long-term cooperative relationship and demonstrate an awareness that both sides are sharing risks.In a negotiation, he should be tolerant and broad-minded, and follow a moderate course that couples hardness with softness.Furthermore, he should have the wits to operate from a strategically advantageous position.For long-term profits, he should make and keep a friendly atmosphere in the negotiation, and bring the focus of a dispute or conflict on the“substance”in question rather than direct his target at the negotiators from the other side.

2.6.2　Specific methods of separating the people from the problem（1）See the situation from the other side's point of view

When you propose your plans/scenarios and suggestions, try on the views of your counterparts to foresee empathetically the possibilities of their accepting the proposals. Understanding their viewpoints and suspicions will help you make a thorough analysis of the whole situation, which will enable you to work out proper countermeasures, reduce the areas of conflict and ameliorate the negotiation atmosphere, thus advancing the negotiation to a successful conclusion.（2）Present more objective information and avoid blaming the other side

Every time condemnation or complaints about each other replaces mutual understanding and cooperation in the negotiation, the parties involved usually equate the people with the problem. A more productive way is to present facts, appeal to reason, attack only the problems, but to avoid blaming the other side.If the other side happens to say something that hurts your patriotic feelings, you should counter their false accusations with facts and ask for an immediate apology and then come back quickly to the substantive issues of the negotiation.（3）React tactfully to emotional outbursts

In a negotiation, you may need to allow the other party to be ablaze with anger；but when he seems to be out of control, you should judge if he is really angry or he is just bluffing. If he is really angry, he will feel guilty when you do not strike back.If he wants to arouse your anger, he will feel frustrated when he does not succeed, and may try harder to apply this tactic again.（4）Help them save face and do not hurt them emotionally

In negotiations, even though the other party may realize he is wrong, he may sometimes stubbornly adhere to his opinion. This is quite likely because he has to save face.Or though he has made a reluctant concession, he may feel resentful.At this time, you need to protect their pride, avoiding any inappropriate words that might irritate them.Hurt feelings may result in very serious consequences：they may cause vengeful counteractions, difficult to deal with.He may counterattack, bringing the negotiation into a stalemate.Then what is the right approach？When the other party falls into a predicament, we should try to reduce their hostile feelings, allow them to blow off steam and let them save face.Take the following case as an example.The representatives from Chinese and American companies were each standing their own ground on the price of exported mica ore, neither side would make any concession.At this moment, the American side received a notice from their headquarters, saying that they could accept the Chinese offer.If the Chinese representative were to sneer at them, saying，“You see, your boss is wiser than you！”the American representatives would be furious, because they would feel that they looked like idiots, and then they might phone their headquarters again, saying they believed the Chinese price was still inflated.Therefore, the negotiation would deteriorate, and all that had been gained would be put at risk.The better way is to praise the other party for professional dedication in considering company's profits.This would make them have a feeling of being honored though they have given up some interests.

Column 2-1　The Eight-Word Maxim of Business Negotiation

Honesty is very important in business negotiation. China has an eight-word business maxim from ancient times about honesty with all customers：“genuine goods at a fair price；neither old nor young cheated”.In English, there is also an eight-letter principle of negotiation：NO TRICKS, which, in Chinese, means“do not cheat”.However, in addition to the literal meaning, every word has a profound implication—and we call these the eight abilities in negotiation.

No matter what kind of negotiation it is—a diplomatic negotiation, trade negotiation, technological or service negotiation, the gaps in negotiation ability（negotiating power）decide its outcomes to some extent. Negotiation power comes from eight sources, i.e.the eight words represented by each letter in the eight-letter principle“NO TRICKS”—need, options, time, relationships, investment, credibility, knowledge, skills.

①“N”represents need.

Generally, as far as the buyer and the seller are concerned, the one who has stronger need is least powerful. If the buyer needs the product badly, the seller has a stronger negotiation power.Conversely, if the seller urgently wants to sell the product, the buyer has the stronger position.

②“O”represents options.

Should initial negotiations fail, the one who has more options has greater negotiation power. Suppose the seller has more available markets, or his products and services are unique, so the buyer has no other options, then the seller can capitalize better on the negotiation.

③“T”represents time.

The more limited your time is, the weaker your position is in negotiation. If the seller is pressured by critical time constraints, the buyer's negotiation strength would be increased.

④“R”represents relationships.

The better and stronger your relationship with your existing clients is, the more powerful you are in your negotiation with other potential clients. If yourexisting clients maintain vigilance and do not want to develop further relations with you, your negotiation power will be weakened.These relationships reflect your reputation for morality and competence, and influence word-of-mouth within an industry.

⑤“I”represents investment.

The more time and energy you invest in the negotiation, the weaker your negotiation position becomes. Because the cost is extremely important to you, you may be led by the nose, and easily manipulated, reducing your bargaining power.

⑥“C”represents credibility.

Having reliable products that your potential clients are interested in can enhance your negotiation power. When the seller knows that his products have been used by the buyer, and furthermore, his products have advantages in price, quality and service, there is no doubt that the seller may enjoy high credibility.However, this single merit alone can not guarantee that the deal will be closed in the end.

⑦“K”represents knowledge.

Knowledge is power. If the seller fully understands the buyer's problems and needs, and is confident that his products can satisfy the buyer's demand, then his negotiation ability will be increased.On the other hand, if the buyer knows more about the product, he will have more power.

⑧“S”represents skills.

Consummate skills directly and easily enhance negotiation power. Of course, negotiation skills are not innate；they are acquired by comprehensive learning, including extensive knowledge, speaking eloquence, and acute thinking, and by experience.

In international business negotiation, we should skillfully use each source of negotiation power in the“no tricks”principle, and should play no tricks.

Summary

1.The game principles of international business negotiation are also calledthe basic guidelines or norms that all parties should obey in international business negotiation.Understanding and following these game principles will help reduce needless conflicts and increase the success rate of negotiations.

2.Negotiators should obey the principle of equal and voluntary participation.No matter which countries the negotiators come from, no matter whether they represent an organization or an individual, they should function as cooperators, not as rivals or opponents.Therefore, no matter how big the difference in their economic power is, their positions in a negotiation are all equal.In negotiation, no one individual has the final say, every party has veto power regarding the negotiation content.All the parties should respect each other, treat each other with due respect, avoid discriminating against or belittling the other side.

3.Negotiators should follow the guideline that honesty is the best policy.All the parties should act with all sincerity, promote understanding and strengthen mutual trust with integrity, but try to ensure that the other party is trustworthy and avoid falling into the pitfall of being sincere while the other side is not.Behaving with sincerity is not contradictory to using negotiation skills.The former is an overall strategic concern, and the later refers to tactics.Both of them are essential for the negotiation's success.

4.Negotiators should obey the principle of mutual reciprocity and mutual benefit.All the participants should insist on the principle of interests first and position second.Don't let positional concerns affect the final gains, spoil the negotiation atmosphere, or prevent the execution of an agreement.

5.Negotiators should follow the principle of fostering commonalities while reducing differences.Specifically, they should seek targets of mutual gains, and abandon minor details so as to achieve the main target, allowing the minor differences which are not compatible with their interests to exist in the agreement as long as they don't affect the“most important mutual gains”.They may make some necessary concessions at the proper time.

6.Negotiators ought to follow the principle of speaking on“good ground.”After all, facts speak louder than words.When the negotiators hold their own stands in a dispute with each other over a specific issue, adopt objective criteria which are neutral, authoritative and scientific.Only with objective criteria can we be reasonable；only with reasonable argument will we be able to persuade otherpeople.

7.Negotiators need to keep the principle of separating the people from the problem.Focus on the problem but not the people and judge the case as it stands.Don't let emotions affect the process of negotiation, or even worse, become the subject of negotiation.Avoid being too friendly, which may lead to making concessions blindly.Avoid being impulsive, and also avoid failing to solve problems after a long delay.Avoid losing control of emotions and letting negotiations degenerate into a personal face-to-face attack.Consider problems from the other party's point of view, and present more objective information.React reasonably to emotions and avoid offending of the other side.

Key words and definitions

1.Game principles of international business negotiation：this is also known as basic principle of international business negotiation, which means the basic criterion or norm that all the parties should obey in international business negotiation.

2.Equality and voluntary negotiator：in international business negotiation, no matter how great the differences between their economic powers are, how different their organizational scales are, if they are willing to negotiate, they have the equal positions.

3.Credibility is the greatest requirement：integrity or sincerity is the basis of international business negotiation.You should promote understanding and enhance mutual trust with sincerity, and pay attention to the other party's integrity to avoid unnecessary misunderstanding and losses.

4.Mutual reciprocity and mutual benefit：the final purpose of international business negotiation is to satisfy the interests and needs of each international business.When you are developing a negotiation plan, put the interests of the two sides into consideration and seek proper solutions actively.Thus you can achieve win-win or multi-win negotiation outcomes.

5.Maximizing commonalities and minimizing differences：put the problems of great discrepancies aside；ignore minor problems, focus on mutual benefits and targets, and, when appropriate, give up some minor interests entirely.

6.Speak on good grounds：in international business negotiation, in order tokeep your own profits and eliminate the other party's suspicions, or refute his objections, you must list facts on your side, and convince people by logical reasoning.Furthermore, adopt a just, scientific and efficient objective criterion.

7.Separate the people from the problem：distinguish the negotiators from the subject under negotiation, look at the problems from the other side's point of view, and present more objective information.Treat emotions reasonably, being careful not to injure the other's feelings, and avoid wandering away from the negotiation subject because of emotional outbursts, which could derail the negotiation.

8.Negotiation power, also known as negotiation strengths：this refers to the overall abilities that negotiators have at their command in a negotiation.Negotiation power depends on the following factors：the need for a specific result, the number of options available, the pressure of limited time, the relationship with former clients, the investment in the negotiation, the credibility of the product or service, the understanding of the other party and his demands, and possession of negotiation skills.

Case Study

In the Sino-American negotiation resulting in China's entry into WTO, the two parties had a fierce debate over the status China would have upon entering WTO. If China entered WTO as a developed country, she would not enjoy the beneficial treatment granted only to developing countries, including a generalized system of preferences, gradual opening of the market, and protection of infant industries.This was an important question of principle, concerning the interests of a country.Therefore, China insisted on joining WTO with the status of a developing country.However, in order to open the door to Chinese markets quickly, so as to gain more market entrant's opportunities and profits, the American negotiators insisted that China should enter with the status of a developed country.Their reason was that China's export industry was increasing rapidly, and its foreign exchange reserve was at top of the world list.China's technology for space satellite launches and returns had reached the level that only a few developed countries had reached.No other developing country was able to do so.One American representative even compared the situation of the poor areas inChina with the situation in Africa and India.He said when he visited the poorest areas in western China；he knocked at a door casually and asked the man of the house if they had had breakfast, the answer was yes.Then he went on asking if they had had lunch, the answer was that they were preparing it.Finally he was told that their dinner was no problem either.But in the poor areas in African countries, and even in India, the situation was totally different.When asked if they had had breakfast, their answer was no；when asked about lunch and dinner, they asked if he would give them relief food.The representative said that from these contrasting experiences, he felt that the situation of China's poor areas was not as serious as they reported it.

China and America had their own understanding and criteria on the issue of China's status when entering the WTO, and were unable to reach an agreement. The focus of this negotiation was which status really applied to China：a developing or developed country.In fact, the UN and the World Bank and some other international organizations had a prevailing criterion—the average GDP of a country.According to UN and International Bank's statistics, countries with an average GDP below 785 US dollars（the criterion in 1996）were the poorest countries.And when this Sino-US negotiation was in process, the average GDP in China was only US$750.Actually, by this criterion China remained one of the poorest countries until the year 2000.Judged by the GDP criterion, the American opinion was obviously untenable.

Discussion questions

1.Why did China and America have a dispute in the negotiation over the question of China's status upon joining WTO？

2.What is the objective criterion that solved China's status problem for entrance into the WTO？

3.In the negotiation concerning China's entry into the WTO, how was the game principle embodied？

4.When you negotiate with a young Japanese businessman who denies the fact of the massacre in Nanjing, how should you use the game principle of separating the people from the problem？

5.Illustrate how to follow the principle of separating the people from theproblem in an international business negotiation.Emphasize how to control one's emotions so that it will not affect negotiation.

6.Illustrate how to use the principle of putting credibility above everything else；and at the same time, how to avoid falling into the pitfall of suffering possible losses because of dealing with an untrustworthy counterpart, even as you are dealing with integrity.

Chapter 3　Preparation for International Business Negotiation

Key Points：

1.Information collection in international business negotiations

2.Organization and preparation for international business negotiations

3.Methods for making international business negotiation plans

4.Physical preparation in international business negotiations【Preview Case】The Hong Kong headquarters of a multi-national company received a telegram from its Japan branch which said that a Japanese client wanted tens of thousands of tons of pebbles and hoped that the supply sources could be available as soon as possible. Hong Kong headquarters found the supply sources quickly through its branches in the mainland and sent samples to the Japanese client.After receiving the samples, the Japanese company replied that their representatives would be sent to Hong Kong for negotiations and possibly to the mainland to investigate the supply sources.

Having been informed of the situation, the Hong Kong headquarters requested its Tokyo branch to provide the information about the profile, size, main business activities, and financial conditions of the Japanese company. Then it made an investigation about the prices on the Chinese market and the international markets as well as the place of its origin；meanwhile, it understood the cause and use of the pebble purchase by Japanese party and determined the plan for quoting prices.After sending the invitation to the Japanese party, Hong Kong headquarters assigned related personnel to form a negotiation group in charge of negotiating with the Japanese company and made negotiation plans and reception agenda immediately.

Whether an international business negotiation succeeds or not is not only determined by the strategies and skills used in formal negotiations, but also closely related to whether enough careful preparations have been made before negotiations. Generally speaking, the more preparatory work is done, the more efficient the negotiation will be.The preparatory work for the negotiation consists of collecting related information, staffing the negotiation team, developing international business negotiation plans and making relevant physical preparation.

3.1　Collecting Information

When the Hong Kong Company sent the invitation to the Japanese Company, some preparatory work of information collection and analysis has been done：

①They had gathered information about the operation of the Japanese Company and the personal data of its representatives.

②They had identified the motives of the Japanese pebble import and the uses of the imported pebbles.

③They had acquired knowledge of special import and export regulations concerning pebbles imposed in Japan and China.

④They had obtained information of pebble prices on the domestic and international markets.

First of all, the Hong Kong Company learnt from its Japanese branch and D＆B Corporation that Japanese Company, based near Ginza, a busy street in Tokyo, was a hardware trading company of medium scale with 12 years of history. In spite of satisfactory operation and credit status, it has never imported pebbles before.The representative sent for the negotiation was a member of the Board of Directors and vice president of the Japanese Company, who was 58 years old and full of trading and negotiating experience, and was fond of drinking and karaoke.

Secondly, the Hong Kong Company got to know that the Japanese Company was in a hurry to find the supply sources of the pebbles so as to take part in the construction bidding for a domestic nuclear power plant. As for the policies and regulations in the two countries, Chinese mainland had no regulations governing or prohibiting the export of fresh water pebbles, but Japan had banned the digging, selling and buying of the pebbles on river rapids in order to protect its rivers and ecological environment.In another word, Japan has been 100%dependent on the import of this kind of natural building material.

What's more, the pebble prices on the international markets vary greatly according to different qualities, sizes and colors. Although the pebbles themselves are not priced very high, FOB prices including land transportation freight and domestic loading and unloading charges were quite different from CFR and CIF prices including sea shipping freight, iftaking distances from the origin to export ports, and from export ports to import ports into consideration.In a word, freight weighs a lot in the quotation of pebbles.

Based on their analysis and study of the above information, the Hong Kong Company made the corresponding negotiation and reception plans.

What has to be done during the preparatory period for international business negotiations is to collect, sort out and analyze the information and data in time about the negotiation counterparts, the purpose of their project, market prices and related laws as much as possible. Accurate and detailed information of the counterparts may ensure an advantage in the negotiation, which will be of great help to achieve the success of a negotiation.Applying inaccurate or one-sided information will make your own party passive or lead to the failure of the negotiation.

Information about the negotiation counterparts consists of the qualification and credit status of the partner company, their negotiators'profiles, domestic and international market trends, laws and regulations as well as cultural backgrounds in related countries and areas.（1）Qualification and credit status

The qualification and credit status consist of the history and status quo, economic and political power, and corporate reputation（its liabilities），capital quantity, operating capability, bank credit and such of the partner company.

①The history and status quo of the partner company refers to the establishing time, registered office address, main business scope and the number of the employees, etc.

②Economic and political power refers to the annual turnover, financial or fiscal conditions, market share and position in its industry at home or abroad, of the partner company or organization；whether it has any political influences or what its political tendency is like.

③Corporate reputation refers to its status of assets and liabilities, brand popularity and word-of-mouth in the market.

④Capital quantity refers to total assets, fixed assets, current assets, cash flow, etc.

⑤Operating capability refers to status of operating profit and loss, contribution ratios of major products, the ability to develop new products, etc.

⑥Bank credit includes the names and numbers of contacting banks, credit it enjoys and whether it has bad accounts in banks, etc.（2）Negotiation representatives

Information about the negotiating representatives from the other side mainly includes the number of the negotiating representatives, the composition of the negotiating team, limits of their authority, and their identity and status. The number and composition of the representatives refers to how many representatives have been chosen to participate in the negotiation and how the team is formed or what people is it composed of？（for example, vice president, project manager, technician and interpreter and so on）.Limits of the representatives'authorities refer to whether the negotiation participants are the direct associates（manufacturer, importer and exporter, wholesaler, retailer）or their agents.If they are the former ones, do they have the authority to make decisions？If they are the latter, what are their limits and scope of authority as an agent？Identity of representatives refers to their nationalities, birth places, diplomas, qualifications, family backgrounds, characters, hobbies, etc.（3）Market quotations

Negotiators should make synthesis comparisons concerning the technological specifications, uses, purchasing costs, quantity available, freight charges, domestic market prices, international market prices, product's life cycle and competitiveness, patents, necessary accessories and after-services and the like of the negotiating item.【Case】In 1983，Shanghai government decided to build No. 1 subway using foreign investment.France, Germany, Britain, USA, Japan, Italy and Canada expressed their intentions to extend co-operation and loans.And in particular, France proposed that it would like to provide more favorable government loans, which is characterized by the following features：no cash is provided, and instead the borrower has to purchase the equipment manufactured by loaning countries with the loans.However, Shanghai government decided to adopt international competition system by carrying out internationally adopted“Net Present Value”（NPV）evaluation, i.e.to make a synthesis evaluation on the capital, technologyand prices proposed by the bidding companies and grade their systematic projects, capital conditions, technical plans and equipment prices respectively as A, B，C, D and E.Eventually, Germany got the bid for its advantage of 100%government soft loans（France offered 46%government loans and 54%commercial loans）at annual interest rate of 0.75%with a loan period of 40 years.Its quotation was 10%lower than France and 30%lower than Britain.The mayor of Shanghai made an immediate decision that they would make use of German loans, purchase German vehicles and equipment and send representatives to Germany to make investigations, conduct negotiations and sign contracts.（Shenjiang Service Guide, Sep.6，2006）（4）Laws and cultures

Before the negotiations, we need to know whether the transacted items will be regulated or restricted by the laws and regulations of our own country or our partner's country, or by international laws；whether the politics, cultures, religious customs, economic development levels, infrastructures, natural resources, climates and geography, and the relationship between other countries and our own country or our partner's country will affect the trade transactions or not.【Case】Sendai is a large city in northern Japan, where Chinese contemporary famous writer LuXun had been studied. In June，2005，in order to strengthen the trading relationship with China, Sendai government studied out a co-operation plan with ZhongRui Group of China, in which a“China Town in the Sky”would be built beside the local Sikansen railway—when it was finished, this overpass of 10 meters high would seem to be a“Dragon City”suspending in the air.Therefore, Sendai government allocated 118.9 billion yen to develop the surrounding areas, while ZhongRui Group invested 17 billion yen for the joint development.This was the only project in which a Chinese company had ever made the largest investment so far in Japan.However, in July，2005，the former mayor of Sendai City who used to support the project was not elected as the mayor and the newly-elected mayor was a bureaucrat of“Eagle Party”with a hard and uncompromising attitude towards China.In July，2006，the newmayor decided to stop the construction of“China Town in the Sky”for the reason of“destructing scenery”and“causing public security problems”.（Singapore Union Mornings：Sendai City stopped constructing“China Street”，July 28，2006）

Though ZhongRui Group had communicated and discussed the project with the newly-organized Sendai government beforehand, the project was frozen, resulting in the loss of their earlier investment without any compensation. There are innumerable examples of business projects affected by political factors of a foreign country.Furthermore, public disorder, political instability caused by radicals who are making troubles or exercising control, and approaching warfare in a country may have a direct or indirect impact on the international business negotiation in process.

3.2　Forming the Negotiation Team

In order to enable the Japanese representatives to change their flight from Hong Kong to Nanjing the very day they arrived, Hong Kong Company's president office specially assigned an administrative manager to be in charge of rear services including meeting the plane, ordering thereturn tickets between Hong Kong and Nanjing, accompanying the Japanese representatives to register for the visa at the Hong Kong Visa Administration Office of China, making arrangements for the clients to settle down at the hotel in Hong Kong and Nanjing, fixing up a place for negotiating, choosing the route and shops for sightseeing and shopping in Hong Kong, booking hotel room, time and size for banquets. For the convenience of travel and negotiation, the Japanese representatives would stay at JunYue Hotel next to the headquarters of Hong Kong Company；and in Nanjing they would stay at JinLing Hotel, the top hotel downtown.

The organizational preparations for international business negotiations consist of deciding the size of the negotiation team, staffing the negotiation team and soliciting the coordination and support from the outside members.

3.2.1　Size of the negotiation team

The size of the negotiation team refers to the number of staff taking part in the negotiation. The following factors should be taken into consideration when we decide the size of a negotiation team：（1）The number of the negotiation team members of your counterpart

The guideline is that both parties should have approximately the same number in order to reflect equality. When the negotiation is held at a host court, the host team can have more members than its counterpart due to the abundant mobile human resources, but large gap between the two parties is not suitable.（2）The complexity of the negotiation

Generally speaking, the number of negotiation staff should be proportional to the complexity of the negotiation, for the more complicated the negotiating project is, the more knowledge and experience it'll be involved and the more team members will be needed.（3）The need for technical experts

The import and export trades usually don't need technical professionals, but the trades involving hi-tech products and patents require the participation of the experts in that field；trades involving laws in one's own country or in the counterpart's country, or relating to international or regional trade agreements have to include related legal experts in the negotiation.（4）The number of the associates in the project

If the negotiating project only concerns the benefits of one or two departments, we can have relatively fewer negotiators；if it concerns the benefits of more departments, it will need representatives from more departments.

3.2.2　The staffing of the negotiation team

The composition of the negotiation team refers to the consideration about the professional backgrounds or credentials, expertise and the status of the team members, and the role they play in the negotiation.（1）Principles for team building

When building a negotiation team, make sure the members are complementary in knowledge and characters and define their roles, responsibilities and tasks clearly.

①Complementary knowledge.Firstly, the negotiation personnel need to possess expertise and knowledge in their own areas respectively and be able to deal with different problems and form a united advantage by bringing out the best in each other in terms of knowledge.Secondly, their expertise and business experience should be complementary.Among all the negotiation members there should be knowledgeable experts as well as experienced and mature veterans so as to improve the force and power of the negotiation group.

②Complementary character.If the negotiation team members can make harmonious complementation among themselves in character and make good use of their strengths, then the greatest advantages of the whole group can be utilized.For instance, extrovert and outgoing members tend to be agile, eloquent, and decisive, but they are prone to be impetuous, not insightful enough or even careless and negligent.On the contrary, introvert members tend to be meticulous and precise in their work, perceptively insightful into the problems, and prudent in their words, stick to the principle, observant and thoughtful, but they are often hesitant, indecisive, ineloquent and not flexible.If the team members have different characters, and play different roles in a negotiation, one playing the hero and the other villain, which helps make up for each other's deficiencies, supplement and complement each other, the problem will be solved more satisfactorily.

③Clearly-defined roles.The negotiation team should have the first fiddler and the second fiddler；every one has his or her position or role in the team.It is a taboo for anyone to be offside.Don't mix up the roles.It should also be avoided that all the members are eager to put in a word.Anyway, under the strict discipline, all the members should try to help and support each other, making a united effort to achieve the goal.（2）Organizational structure of the team

The structure of the team must be taken into consideration for the negotiation group that consists of two or more than two members except for a one-to-one negotiation. A relatively“standard”negotiation team should contain the following members：

①Leading personnel

The negotiator in charge of a negotiation should be an authoritative person with relatively high rank and more power. The leading personnel should possess all-sided knowledge, the ability to make a resolute decision and an authoritative position.This person should be the core of the team and play a major role during the negotiation, in charge of constructing the negotiation group, controlling the process of the negotiation, adjusting the negotiation strategies and the plans in emergencies and making the final decisions on the concessions they are to make and the agreement they are to reach.The leading negotiator can be specially assigned for the negotiation or someone who held another concurrent post in the team.

②Business/Commercial personnel

Business/Commercial personnel are usually the marketing personnel such as salespersons, sales managers, purchasing managers, project managers or other professional negotiation experts invited from the outside. They are usually very familiar with the international trade practice, highly-experienced in domestic and international marketing and negotiation, and well-informed in the situation of domestic and international markets of the project under the negotiation.

③Professional and technical personnel

The engineers or the technical experts who are quite familiar with related technological and product standards and the status quo of the technical know-how are responsible for negotiating related production technology, products functions, quality standards, products check and accept, technological services as well as providing consultation and advice for making the decision concerning project prices bargain.

④Financial personnel

The financial personnel who are familiar with accounting and finance professions and good at accounting are accountable for estimation of the prices, terms of payment, ways of payment, settlement currency and exchange rate for the project under negotiation.

⑤Legal personnel

The specially invited lawyers or enterprise law consultants who know trade laws, commercial practice agreements and law enforcement well are mainly responsible for the validity, completeness and preciseness of the contract terms. They also take part in the negotiation related to laws.

⑥Interpreters

Interpreters are usually full-time or part-time translators good at English and business, whose task is to do written or oral translation. Interpreters in international business negotiations are required to express precisely and make good use of language skills.Their translation skills will directly affect the effectiveness of communication and negotiation.

⑦Secretaries

As for large-scale and high-level business negotiations, special personnel should be arranged to record the process of the whole negotiation and the speeches made by all the parties so as to be reference for drafting an agreement.

In actual negotiation cases, the above-mentioned personnel can be increased or decreased in number according to the situation. Not all the personnel mentioned above will participate in the whole process of the negotiation but at least we need a person in charge and a professional member good at a foreign language or an interpreter.The interpreter and the secretary can be selected from the negotiation personnel.

3.2.3　Collaboration and support from the outside members

Besides the negotiation personnel, some full-time or part-time personnel should be arranged to provide support and services for the negotiation activities. These kinds of people include the following：（1）Related personnel in other functional departments

These people may include department managers or the professionals from stock control and transport department, advertising department, public relations department and research and development department.（2）Administrative personnel

Administrative personnel such as the company secretaries, librarians, office workers, drivers may be helpful in a negotiation as well.

The tasks of outside staff are to provide some accessory information support and services from behind, at the beginning or at the end of, or in the intervals of the negotiation. The guideline to choose this kind of staff is that they must be proper and indispensable people, highly efficient and be ready for providing service any time.

The basic principle of organizing a negotiation team for an international business negotiation is to keep the team as small and efficient as possible. Small：a principle that can demonstrate the high efficiency and authority of one part.Efficient：a principle that can show the high quality of the negotiation personnel and the power and management concept of a company.There is no doubt that“small”does not mean the fewer the team members are, the better the negotiation result can be.The key point here is to be practical.It is commendable to have enough members.

3.3　Planning for International Business Negotiation

The highest negotiation objective was to close the deal at CIF prices；the intermediate objective was to close the deal at FOB prices and thebottom line was to charge 5%to 10%commission according to the purchasing price of the pebbles.（2）Negotiation agenda

The initial informal negotiation was scheduled at the feast after Japanese party's arrival in Hong Kong at noon, addressing the key points of negotiation and meeting agenda without directly involving the sensitive issue of price. The second formal negotiation was arranged on the following morning or the whole day in the meeting room of CG Group Headquarter to discuss the trade modes and conditions.The third negotiation was arranged on the afternoon of the day after the second negotiation so as to spare more time to make the final decision of all the trade details until the contract was signed in the end.（3）Negotiation strategies

After investigating the place of origin, the Japanese party was relatively clear about the formation of the purchasing prices and the FOB, CFR or CIF prices under different transportation mode. The chief negotiator of the Japanese side was good at calculation, yet very introvert and frank.Therefore, the key points for the negotiation should be frank, avoiding the tangles on irrelevant trifles, controlling the negotiation time and adjusting the trade mode flexibly according to the import quantity by the Japanese company, but the bottom line was to establish everlasting trading relationship with low profits.（4）Specific roles of the negotiation personnel

The vice president acted as the chief negotiator and the sales manager was responsible for accompanying the guests throughout the whole investigation and take part in every negotiation, analyzing and explaining technical specifications and formation of the prices as well as drafting up the trade agreement.

3.3.1　Gist of a negotiation plan

The gist of a negotiation plan refers to the basic requirements for developing a negotiation plan：（1）Requirement toward the key points of the negotiation

The whole negotiation must focus on the key points.（2）Requirement towards the thoughtfulness and flexibility of the plan

Thoughtfulness refers to appointing specific personnel responsible for every step of every project；flexibility means the negotiation plan should be adaptable or elastic allowing reasonable leeway.（3）Requirement towards the predictability of the plan

The negotiation plan should be able to foresee the various situations that may emerge in the course of negotiation, i. e.to forecast the different possible consequences in different cases and come up with the countermeasures that can be adopted in response.（4）Requirement towards the negotiation time

It should be decided that whether the intended negotiation should be immediately concluded, or be carried out like marathon race or be adapted to the actual situation.（5）Requirements towards the negotiation atmosphere

The negotiation plan should set the tone for the negotiation：whether the negotiators should be serious and tense, or friendly and relaxed；whether they should be frank and sincere, or alert and cautious.

3.3.2　Targets of a negotiation plan

Negotiation targets refer to the commercial goals that are expected to achieve through negotiation. Negotiation targets specified in a negotiation plan are what sort of problems are going to be solved through the negotiation.Targets of an international business negotiation can be generally divided into three categories：（1）The highest target, or the maximum expectation or target

This is the best target that one party will seek to maximize its gains in the negotiation or the top limit that the other party can give up. This goal is very difficult to achieve because the maximization of one party's benefits means the minimization of the other party's benefits, especially in a zero-sum negotiation.It is the critical point at which the other party will retreat and cause the negotiation to break down.So it will be greatly appreciated if the negotiation personnel can achieve agreements at this critical point.However, the top target can be given up when it is quite impossible to achieve it.（2）Acceptable target, or expected target

This is an intermediate expected goal for one party and still an acceptable oneto the other as well, which is usually identified after the synthesis analysis about various related information, and scientific and thorough argumentation and reasoning, taking various concessions into consideration. This goal has shown the sincerity of both parties；however, it is still a flexible and faint area which can be set after several rounds of bargains.（3）The lowest target, or limited target, basic target or must-be-realized target

Which is the least requirement of the negotiation as well as the critical point where negotiation can break down. In other words, if the lowest goal can't be realized, the negotiation would rather be abandoned.The bottom line of the negotiation target must be strictly kept confidential.Generally, only the key personnel should be informed of it and other personnel do not need to know.

A complicated international business negotiation needs to attain many goals. In this case, we can divide the negotiating item into numerous sub-items which may be used as bases for making negotiation plans and set the negotiation targets.Then, the targets would be arranged in the order of importance or priority：as far as the overall situation is concerned, which terms or conditions, or clauses must reach the highest target, which can reach acceptable targets, which can be all right with the lowest target or which can be even given up.

3.3.3　Negotiation strategies

Negotiation strategies refer to the tactics and techniques used in the actual process of a negotiation to meet the negotiation targets. International business negotiations are by no means simple bargaining.They are a synthesis competition in overall strength, capability, skills, culture, concepts and the like.（1）Factors that need to be considered in designing business negotiation strategies

①Will the negotiation take place at the host court, the guest court or a neutral ground？

②What are the advantages or strengths each party has？

③Which party will be affected more greatly by the outcome of the negotiation？

④What are the strengths（rank and composition）of the counterpart teamand the character of their chief negotiator？

⑤Which party will be affected more greatly by the length of time the negotiation takes？

⑥Is it necessary to build up long-term cooperative relationship？

After comparing the overall strengths of all the participants and the above factors, negotiators can make a judgment about whether their own party has an advantageous position in the negotiation or not. Therefore, corresponding strategies can be established in turn for bidding, bargaining, sticking to a bid, making concession and breaking an impasse.【Case】The manager of a button enterprise in Yiwu, Zhejiang province encountered the representative of a world-famous fashion company at the Fashion Festival in Paris, France and intended to establish business relationship with this well-known company in order to export their buttons and accessories to it. After looking at the button samples brought by the manager from Yiwu, the French company invited him to have a face-to-face talk a week later.Seated in the modern and stylish meeting hall, the manager from Yiwu got to feel a little inferior.As a matter of fact, this was just a negotiation strategy of the French company：on the one hand, through the comparison between the worldly well known big company and the Chinese small enterprise, and the comparison between the magnificent and stylish exhibition hall and the small humble workshop, the French company wanted to impose a psychological pressure on the manager from Yiwu；on the other hand, the French company intended to force the Chinese part to reduce the expected value so as to make great concessions on the quotation of buttons and accessories because they knew that the manager from Yiwu was anxious about the high cost of staying in France, hoping to close the deal as soon as possible.（2）Forms of negotiation strategies

①Thorough negotiation strategy, which is usually suitable for negotiations of medium-and large-sized projects.The information collected needs to be analyzed and discussed beforehand so as to develop a detailed negotiating plan which lists the issues including the negotiation gist and objectives, the advantages and disadvantages of each party, negotiation steps, staffing and the structure of thenegotiation team, the chief negotiator, opening strategy, countermeasures in case of emergency, and bottom concessions.The plan should be submitted to the top-level management for approval and used by key negotiating personnel as reference and implemented in negotiation.

②Sketchy negotiation strategy, which is usually suitable for usual business negotiations.The negotiation subject, personnel and structure of the negotiation team, the highest target, the lowest target, the acceptable target, key points worthy of attention and so forth are listed in written form and be used as reference by related personnel.

③Tacit-agreement negotiation strategy, which is suitable for routine business negotiations or“one-to-one”and“two-to-one”negotiation with regular clients.The negotiators of one side are quite familiar with the background and the targets of the other side, so they can make oral agreement on the negotiation targets and strategies with the senior managers and other negotiators from their own side.

No matter what forms of negotiation strategies are adopted, attention should be paid to keep it strictly confidential. The top manager and the negotiation team members should record the commonly-agreed targets and counteractions under special circumstances in written form respectively at the preparatory meeting for making negotiation strategies in order to be able to speak with the same voice.It is best advised not to ask the secretary or an outsider to print it and thus prevent the strategies from leaking out.

3.3.4　Negotiation agenda

Negotiation Agenda refers to the arrangement for the timing and site choice of the negotiation, and issues discussed. The agenda is usually prepared by the host party or discussed by both parties in advance, which can be segmented into open agenda and restricted agenda sometimes.（1）Scheduling of the negotiation

Negotiation agenda should list when the negotiation is conducted, how long it lasts and what issues are discussed in each session（such as at what time to begin and to end, morning, afternoon, what month, what date……）. Whether the scheduling is proper and reasonable is also a part of negotiation strategies.Let us suppose that a company headquartered in Shanghai receives the negotiationrepresentatives who arrive in Shanghai from Britain.The representatives from Shanghai could be calm, free from haste, and wait at their ease for the exhausted partners；while the British representatives would be affected in reasoning and judgment ability due to the jet lag.In addition, if the negotiation schedule is arranged too tightly, visiting representatives would have to get starting the negotiation in their haste without preparation and thus throw themselves into confusion, having difficulty carrying out various strategies；if the negotiation schedule is arranged too loosely, it would not only result in the waste of too much time, energy and money, but also possible loss of important opportunities with the changing situation.（2）Negotiation site

Negotiation sites are usually chosen by the hosting party and then informed to the visiting team, or one party proposes several plans for the other team or teams to choose. They are usually a negotiation hall, meeting room, manager's office of the host company.A meeting room or an office of a third party can also be rented for use；the negotiation can also be arranged in a reception room or a bar in a hotel, a restaurant, a gym or an entertainment center.Negotiation sites can be a fixed place or changed in order to adjust negotiation atmosphere.When the negotiation site is a meeting room of the host party, the host team can take advantage of the host court, assembling and utilizing data and resources conveniently.In case of a deadlock in the negotiation, alternative activities like a dinner party, sightseeing, swimming and playing golf can make some breakthrough, which is difficult to realize on the negotiation tables.（3）Negotiation issues

Negotiation issues refer to the various problems that each side has proposed and planned to confer in the negotiation. Both sides can have communications beforehand to identify negotiation issues；or each side proposes different issues and then has a discussion together.When issues are identified, they should be listed in terms of priority and logical order.（4）Open agenda and restricted agenda

①Open agenda, or general rule agenda, means the schedules of the negotiation that all the parties concerned observe and follow.The open agenda consists of issues to be discussed, time, place, staffing and receptionarrangement, which is usually typed and printed as documents after the consensus was reached, used as negotiation reference and implemented by all the parties.

②Restricted agenda, or detailed rule agenda, refers to the detailed arrangement of negotiation strategies of one's own party, which is only to the knowledge of the top executives and negotiation staff of the company because it is confidential information.Restricted agenda mainly consists of coordinated action and speech in the negotiation, counteractions under special circumstances, speech strategies（when to question, what kind of questions, who raises the questions, who complements, who answers certain kinds of questions from the partner, how to argue, when to adjourn the negotiation and so on），the exchange of the negotiation team members and the negotiation scheduling strategies.（5）Key points that need attention when making the negotiation agenda for one's own side

①Make good use of the factors of climate, favorable geographical conditions and the support from other people under the prerequisite of not baffling the partner.

②Design negotiation strategies to go along with the process of the negotiation.For example, under what circumstances should the trump card be used to surprise the other side？How to drop a hint foreshadowing a counterattack on the other side？In what difficult situation is a concession made？And what concession to make？

③Avoid showing all the cards in one's hand.（6）Points that need attention when the other side designs the negotiation agenda

①Don't accept the agenda too easily without reading it carefully.

②Be careful to find out the issue that has been omitted on purpose or unintentionally and propose to make it up promptly, or leave it to be discussed later to gain mastery by striking only after the other side has struck and forced one into difficulty, pointing out unexpectedly the oversight in the agenda.

③Point out anything unsatisfactory in the agenda immediately and provide revision instead of indulging the other party.

④Find out the weakness or negotiation intention from the other party's agenda and make the counteractions so as to attack the other party at the necessarymoment.

Though business negotiation agenda is only a plan designed beforehand, somewhat like idle theorizing of an armchair strategist, a good negotiation agenda can indeed set and control the pace and direction of the negotiation. If a negotiation agenda can put every step and every change under its control, it can be called a very thorough and smart strategy.

3.4　Physical Preparations

Physical preparations for international business negotiations mainly consist of the following four aspects：the choice of negotiation site, the decoration of negotiation hall, the arrangement of accommodation, visit and investigations. Carefully planned physical preparations can always have a direct or indirect impact on the whole negotiation process.The French fashion company mentioned above chose the magnificent guests meeting hall of their own headquarters as their negotiation site rather than the hotel where the guest from Wenzhou lived with the hope of forcing the manager from China to feel humble or inferior in the elegantand graceful physical environment so as to cut the prices at their will.

3.4.1　The choice of negotiation places

The choice of negotiation courts includes the choices of the country or region and the specific negotiation site.（1）Negotiation location

The second chapter of this book has offered an analysis about the advantages and disadvantages of the place choices at the“host court”（host country），the“guest court”（visiting country）and a third place or country. Choosing different negotiation places will make a difference towards the negotiation to some extent.However, wherever the negotiation takes place, it will be both advantageous and disadvantageous to both negotiation parties.（2）Negotiation sites

The American psychologist Mr. Taylor had conducted an experiment：most people can obtain the ability to persuade others in their own living room than in the living room of others'.Because human beings with animal nature have a common state of mind, that is, they can release more powerful energy within their own“domain”so as to be successful more often.This is also the case for international business negotiations.

If the site of an international business negotiation is the reception room, office or meeting room of their own company, negotiators will have the following advantages：

①Familiar surroundings will bring the feeling of calmness and superiority, which will place psychological pressures to the other party；

②Save the host negotiator's expenses and time to go abroad；

③It's convenient to report, ask for advice and acquire supporting information.

If the negotiation site is chosen in the hotel where the guests stay or at the exhibition stand of the guests abroad, guests will feel at ease just like at home, which helps reduce their nervousness in another country more or less. For instance, a Japanese manager who always goes to Shanghai for business likes to invite the Chinese manager to the teahouse of the Garden Hotel he stays in so as to gain a feeling of being the host instead of the guest.

Generally speaking, if conditions permit, a company will choose its own territory as the negotiation place. On the one hand, the host company can extend their hospitality and sincerity to the guests and show off its own overall power or strengths as well；on the other hand, used as part of negotiation strategy, well-decorated meeting room will exercise psychological impact on the other party.On the contrary, if a company often does not allow its clients to pay a visit to its headquarters, its overall strength is always doubtable.For example, an“international fertilizer agency”that claimed that its headquarters was in London and it had many branch companies all over the world not only failed to meet the guests at the airport as they promised, but also could not explain things clearly to the purchasers who demanded to visit it.Finally, it proved to be a“briefcase company”，which had been registered only three months ago in the common residence with only six people on the staff, and a telephone system and a fax facility sharing the same number.Facing with such a liar company, no one would like to start talking about business with it.

3.4.2　Decorations of the negotiation sites

There is an art in the decorations of the negotiation sites, which seem to be done in more exquisite taste than for domestic business negotiations, but it is not necessarily the case for all. Some formal negotiations for large projects do have some requirements about the choice of the negotiation tables and the seating of the negotiation staff.

In some relatively formal international business negotiations, the properness of the negotiation location decorations can reflect the management level of the host party to some extent. If the host party does not know the correct seating of the negotiation location according to the international practice, it is hard to say the host party is an expert in negotiation.Therefore, some veteran negotiators judge whether the counterpart has negotiation experience and how much attention the other party has paid based on the decorations and settings of the negotiation location.（1）Setting of rectangular tables

Rectangular tables are usually used in business negotiations with both parties sitting on each side：the host party sits behind the door or on the left of the door；and the other members all sit on the right or the left of the chief negotiator of each party according to their ranks so as to communicate and support each other more easily.（2）Setting of square tables

The major negotiators sit face to face with the host party sitting behind the door or on the left of the door. All the members sit on the right or the left of their chief negotiator from each party.If there is not enough space, they can sit around the square table.（3）Setting of round tables

The major negotiators sit face to face with the host party sitting behind the door or on the left of the door. All the staff sit on the right or the left of the major negotiator of each party according to the ranks or they can sit in a circle.

Square tables and round tables are suitable for relatively small-sized negotiations.

In fact, some international business negotiations often adopt a casual way of seating, even without a negotiation table：only a coffee table in the middle, or both parties sit on the same couch. The above forms are fit for small scale and informal negotiations between regular clients.（4）Other facilities and equipment

Chairs：chairs should match the negotiation table in style and color, comfortable to sit in because too soft and sunken chairs will make people sleepy and distracted.

Demonstration boards：they can be used to demonstrate figures and explain cases directly. To be fastidious, the negotiation room may be furnished with an electronic inductor board with printing capacity.Or a black or white board with writing pens is equipped.

Projectors：they can be used to demonstrate figures, pictures or information. Usually a reflection projector or a computerized projector will be used.

Other devices：ashtrays, pads, boshes or ball pens, paper folders, tea, coffee, boiled water, iced water and so on.

We'd better not use the tape recorder unless we have asked for the permission from the partner.

3.4.3　Arrangements for board and lodging

Whether the negotiation location is arranged at the host's place or the guests'place, arrangement should be made for the accommodation of the guests beforehand. The host party should have the lodging considerate, careful, convenient and comfortable for the visitors.（1）Lodging

If the guests pay all the bills by themselves, it would be better if the host could communicate with them to make sure of the standard and the class of the hotel they want to stay in. If the host party pays the hotel bills, the host should have a careful consideration of the choice of the hotels（especially the luxurious hotels），which should be taken as a kind of investment, and thus needs to estimate its returns in future；If the clients come from the western countries, they value time and efficiency very much；and too many luxurious arrangements and activities will make them doubt your management level and intention behind.Hence, the principle to arrange the hotel is to de-emphasize luxury, but strive for convenient transportation and closeness to the negotiation site as much as possible；don't be too far away from shopping centers in order to be convenient for shopping；if the guests can appreciate the beautiful scenery out of the window, they will feel the kindness and carefulness of the host party so that they can be relaxed themselves.（2）Board【Case】A Hong Kong manager was at the airport to meet a mainland delegation just coming back from Europe at 22：00. Knowing that they have finished their dinner on the plane, the manager treated all the members of the delegation well in a restaurant after arranging them to stay in the hotel.Although it was two or three o'clock in the early morning next day when they finished the feast, both parties were quite pleased.Eastern and western guests have different eating customs and oriental people value eating more.Suppose the Hong Kong boss had only arranged the guests to stay in the hotel without treating them, he would have been complained by his guests.

Most Westerners value efficiency and do not like complex and lengthyreception ceremony. Since they have been accustomed to having western-style food without too much interest in oriental food, we can arrange the dishes combined with meat, fish and vegetables properly with our own characteristics, not necessarily the most valuable dishes but to avoid the dishes they never eat（such as dog meat），that will be completely OK.In addition, please leave some space to the guests.It is unnecessary to treat the guests for every meal or order expensive dishes for every meal.Proper dishes will do so as to avoid waste and not to irritate western guests.

3.4.4　Visiting and sightseeing

If time permits, especially when it is the first time the guests have come to the host territory, the host party can usually arrange some visiting and sight-seeing. The following places can be taken into consideration to visit：（1）Factories, equipment and places of origin related to the negotiation subject（2）Famous and symbolic local scenic spots（3）Worldly well-known restaurants and shopping centers with local characteristics（4）Other places of interest or entertainment that guests get interested in

Arranging the guests to have a visit will deepen the guests'knowledge of the host culture, remove the discomfort of the travel and relax themselves as well as get in touch with each other more often to build up a harmonious relationship, all of which will be favorable for the processing of the negotiation.

Generally speaking, the expenses of visiting and sight-seeing are not very large, so the host party can pay all the bills. There is no doubt that sensitive military areas, confidential factories and production lines should be avoided during the visit.

3.5　Simulated Negotiations

As for some important international business negotiations, though we have made careful plans and arrangements beforehand, we can carry out a simulated negotiation in order to avoid various possible carelessness and mistakes and try tofind as many counteractions under any emergencies as possible. A simulated negotiation refers to a“firing”of opinions on negotiation clauses, in which we need to choose some staff good at reasoning and arguing as our counterparts and ask them to start from the position and viewpoint of our counterparts to make various supposition and assumption in a simulated way so as to obtain some experience with pertinence.

3.5.1　Necessity of simulated negotiations

Not all international business negotiations need rehearsals beforehand. However, some important negotiations, especially the first formal negotiation, or some for which we are not quite sure about the thinking pattern and intention of the counterparts, we can consider having a simulated negotiation so as to check whether the negotiation plan of our own party is complete or not and to accumulate some experience for preparing the staff for the negotiation.

Key focus of simulated negotiations：（1）Check whether the negotiation plan is thorough and feasible or not（2）Train and improve the negotiators'ability to meet the contingency

3.5.2　Contents of simulated negotiations

The contents of the simulated negotiation should be the same as the formal negotiation. Of course, in order to fine more problems, we can segment the contents into more detailed ones and have an argument about each sub-item one by one；we can also choose some difficult parts for simulated negotiation.The key points of simulated negotiations vary a lot according to different types of negotiations.If it is the first negotiation or a completely new negotiation, or a negotiation with completely new counterparts, we should try to attend each and every aspect of the negotiation as possible；on the contrary, we could be brief on the contents of simulated negotiation otherwise.

3.5.3　Forms of simulated negotiations（1）Group simulated negotiation

This kind of simulated negotiation is fit for business negotiations many staff participate in. We can divide our staff into two groups, one is the host party andthe other group plays the rival.Time permitting, the two groups can exchange the roles so as to experience the feeling in formal negotiations.Group simulated negotiation is of great help to have a full check about the negotiation plan and to make the negotiation staff clearer about every step of the negotiation.（2）One-to-many simulated negotiations

Time, staff and budget being limited, we can make a simulated negotiation simplified by arranging the chief negotiator or the second chief negotiator to play the role of the opposing negotiators and enabling them to question and refute selling terms and important issues of our own side. This kind of practice can not only save time and make key points stand out, but also find out some supporting evidence or arguments needed to be revised and complemented so as to make improvement.

Summary

1.Whether an international business negotiation can achieve success or not is not only determined by the use of related strategies and skills in formal negotiations, but also closely related to whether abundant and careful preparations can be made beforehand.Generally speaking, the more preparatory work is done, the better result the negotiation can achieve.The preparatory work for the negotiation consists of the collection of related information, the assignment of the negotiating staff, the making of the international business negotiation plans and related physical preparation.

2.What must be done during preparatory period for international business negotiations is to collect, select and analyze the information and materials about the negotiation rivals, item uses or project purposes, market prices and related laws as soon and carefully as possible.Possessing accurate and detailed information of your rivals can get you the initiative of the negotiation so that you can make related counteractions which will be of great help to achieve the success of negotiation.Applying inaccurate or one-sided information will make your own party passive or lead to the failure of the negotiation.

3.The organizational preparations for international business negotiations consist of the size of the negotiation team, the formation of the team members, and co-operation and support from the outside members.The guidelines forselecting the team members are mutually complementary knowledge and character, and clearly-defined roles.The basic principles for organizing international business negotiations are“small”and“efficient”.Small：a principle that can demonstrate the high efficiency and authority of one party.Efficient：a principle that can show the high quality of the negotiation staff and the power and management of a company.There is no doubt that small does not mean the fewer members the team has, the better result it can achieve.We need to be practical：proper number is the best.

4.Making a negotiation plan with an explicit gist and clear goals as well as thorough strategies is the most important preparatory step before negotiation.The plan should have outstanding key points and forwardness.The negotiation goals can be divided as the highest goals, acceptable goals and the lowest goals.The negotiation strategies should take negotiation locations, advantages of both parties, effects of success and failure, the counterpart's strength, time effect and co-operative relation into consideration.No matter what form of negotiation strategy（thorough/sketchy/tacit-agreement negotiation strategy）is adopted we should pay attention to strictly keeping it confidential.

5.Negotiation agenda refers to the scheduling of negotiation time, sites and topics discussed.The agenda is usually prepared by the host party or established through discussion by both parties.Open agenda, or general rule agenda, means the common agenda both parties abide by and use.Restricted agenda, or detailed rule agenda, refers to the detailed arrangement of negotiation strategies of the host party, which only the senior manager and negotiation staff need to familiarize themselves with because it is confidential information.

6.Physical preparations for international business negotiations mainly consist of the following four aspects：the choice of negotiation sites, the decoration of negotiation room, the arrangement of accommodation, visiting as well as investigation.Carefully planned physical preparation can always affect the whole negotiation process directly or indirectly.

7.For some important negotiations, especially the first formal negotiation, or those for which we are not quite sure about the thinking pattern and intention of the counterpart, we can consider having a simulated negotiation so as to check whether the negotiation plan of our party is complete or not, allowing ournegotiators to gain some experience and get prepared for the negotiation.

Key words and definitions

1.Qualification and credit status：consist of the history and status quo, economic and political power, and corporate reputation（its liabilities），capital quantity, operating capability, bank credit and such of the partner company.

2.Formation of the negotiation team：refers to the professional backgrounds and level of the negotiation personnel and the role they play in the negotiation.

3.Negotiation goals：refer to the commercial goals to be achieved through negotiations, which are usually divided into the highest goals, acceptable goals and lowest goals.

4.Negotiation strategy：refers to the methods and techniques used to realize the negotiation goals.International business negotiations are by no means simple bargaining.They are a synthesis competition in overall strength, ability, skills, culture and notions.

5.Negotiation agenda：refers to the scheduling of negotiation time, sites and topics to be discussed.The agenda is usually prepared by the host party or established through discussion by both parties.It can be segmented as open agenda and restricted agenda.

6.Negotiation location：includes the choices of the country, region and the specific negotiation site.

7.A simulated negotiation：refers to a“confrontation”of ideas or opinions on negotiation clauses, in which we choose some staff good at reasoning and arguing to play the role of our counterparts and ask them to imitate the negotiation styles of our counterparts, start from the position and viewpoint of our counterparts and make various supposition and assumption in a simulated way so as to obtain some experience with pertinence.

Case Study【Case A】A well known Chinese manufacturer of electrical household appliances invited a giant of white electrical household appliances from European Union to have a discussion about co-operation. The European party sent anassistant, a fridge department manager and a washing machine department manager to attend the negotiation.After over ten hours of flight, the European guests arrived in Beijing.Then they changed to another domestic flight to get to a city in Guangdong, where the electrical household appliances manufacturer was based at 23：40 that night.The senior managers and related department managers were all present to meet them at the airport, which made the European guests very appreciative.

In order to show our kindness and hospitality, all the 12 Chinese senior managers, department managers and interpreters treated the two European guests in a five-star hotel on the 28th floor in the center of the city. Being accorded lavish hospitality, the European guests accepted the toasts of Chinese representatives again and again, regardless of the strain from the flight and the discomfort due to the jet lag.Two of them were totally drunk by Chinese Maotai so that the negotiation planned on the following day was delayed till the third day.During the following week, Chinese party treated every meal.However, the three European representatives learned a lesson from their experience the night before, controlling the amount of alcohol they drank, and did not make a show of themselves.

The Chinese negotiation team can be described as powerfully and thoroughly designed：a president, two vice presidents, three department managers, a senior engineer, a CFO, a lawyer, an interpreter and a secretary. Chinese party was quite familiar with the company background and personal status of the negotiation counterparts.Additionally, they had made careful negotiation plans and physical preparations.All the expenses at the five-star hotel were charged to the account of the Chinese party.

However, in the negotiation hall carefully arranged by the Chinese company were displayed the samples of the products produced by its factory over the past years, which had sometimes distracted the attention of the negotiation representatives. In addition, maybe in order to prove the feature of the air-conditioners displayed, the host party fixed the temperature at 16℃，which made the chief negotiator who had allergic rhinitis sneeze frequently.Fortunately, the host party realized the problem immediately and adjusted the temperature to the proper one.The European representatives noticed that Chinese party was verygenerous in all the arrangements with the eagerness to cooperate with them.Therefore, they made proper adjustments in their offer.

It can be seen in the above case that except the overdrinking and too low temperature of the air conditioner, the whole negotiation went on quite smoothly. Both parties reached co-operation agreements on the introduction of the latest technology and equipment from the European factories.During the negotiation, the Chinese party specially arranged the European guests to visit several local places of interest.The European representatives were amazed at the Chinese traditional culture and attractive urban scenery in Southern China.Ideal investment environment and beautiful natural and cultural scenery made the European representatives quite pleased；therefore, the negotiation went on quite smoothly.【Case B】Japan lacks coal and iron ore resources very much, while Australia has an abundant amount of coal and iron ores. Japan hoped that it could import the above two resources from Australia, while Australia did not worry about the sale of their coal and iron ores at all.Therefore, Japan's negotiation status was lower than Australia and Australia got the upper hand.However, after the Japanese party invited the Australian party to Japan for negotiation, situation changed a lot.Australians are easy-going and not rigidly adhere to customs and etiquette too much in natural disposition, while Japanese observe customs and courtesies anytime and anywhere, and they are always dressed in formal suits for the meeting, which made the Australian representatives uneasy for they had been accustomed to comfortable lifestyle.Just a few days after their arrival in Japan, the Australians were anxious to go back to their hometown to drift, surf and hunt freely with their wives, children and friends in the valley and on the beach.Hence, as time went by, Australian representatives demonstrated more and more impatience at the negotiation tables.As the host party, Japanese representatives bargained with the Australian party at ease and gradually they gained the upper hand.As a consequence, Japanese party only paid some expenses for food and drink as their“fish bait”to get the“large fish”—the transactions of a large amount of coal and iron ores.

Discussion questions

1.Try to analyze Case A, and tell the merits and shortcomings about thearrangement of the negotiation.

2.Try to analyze Case B, and tell the reason why the Japanese party can gain the upper hand.

3.What kind of role does information play in international business negotiations？

4.How do we collect the data and information of the negotiation counterpart？

5.How do we make preparations and organizations for the negotiation？

6.What qualifications should the chief negotiator possess？

7.How do we establish the negotiation goals or targets？

8.What are the key points of international business negotiation strategies？

9.How do we design the agenda for business negotiations？

10.What kinds of problems should we pay attention to when we arrange the negotiation sites？

Chapter 4　Opening of International Business Negotiation

Key Points：

1.Impacts of different negotiating atmospheres on negotiations

2.Steps to open an international business negotiation

3.Factors we should pay attention to in the opening statements

4.Common strategies for opening an international business negotiations【Preview Case】The chief editor of the German magazine“European Business”was invited to Shanghai to have a negotiation for its cooperation with the Chinese magazine“International Market Journal”. The negotiation site was chosen in the meeting room of International Market Journal.After greetings, the editor-in-chief of“International Market Journal”magazine talked widely ranging from the European-style buildings along the Bund to his impressions on his journey to Germany.The German general editor immediately identified with his Chinese counterpart for their common appreciation for the buildings of classical styles.Therefore, the negotiation opened in a very friendly and harmonious atmosphere.

After presenting the magazine history, backgrounds, status quo and the willingness for this negotiation respectively, both parties considered it necessary to adapt their expectations of the cooperation so as to fit the requirements of Chinese laws and regulations. The Chinese editor-in-chief found that there seemed to be some doubts in the German chief editor towards the circulation and reputation of the“International Market Journal”. Hence, at the intervals of the negotiation, he asked one of his journalists to accompany the German chief editor to pay a visit to the Bund, Lujiazui and the People's Square to investigate the selling of the“International Market Journal”at the bookstands in the street as well as at the subway station.Meanwhile, they made the German chief editor notice the enormous lap house ads for the“International Market Journal”within the subway station.Then in the negotiation that followed, the German chief editor changed his attitude from picky to frank.The negotiation opening arranged by the Chinese part has achieved a success.

After gathering and sorting outing the information as well as establishing the negotiation plan in the previous period, the international negotiation has formally begun！Just as the old saying goes，“Well begun is half done”. In the course of the international business negotiation, the opening approach and atmosphere have vital impact on the development of the negotiation.

Negotiation opening refers to the behavior of greeting, introducing, stating one's positions, and exploring the counterpart's intention or position, in order to influence and manipulate the process of negotiation so that they can pave the way to an advantageous position in the negotiation.

At the beginning of a negotiation, experienced negotiators tend to read the signals from what the other party says and does to explore their attitude and sincerity and decide whether the other party is willing to reach an agreement or pessimistically does some perfunctory job. Therefore, the opening decides the tone and direction of the whole negotiation.

4.1　Creating a Right Negotiation Atmosphere

The negotiators of the Hong Kong company had succeeded in getting the visa and were about to fly to Germany when they got the notice from Singaporean client that the hundreds of thousands tons of carbamide in the storehouse of Hamburg had been sold out. But there was possibly some in Turkey.The Hong Kong company felt suspicious.But as the domestic buyer urged to deliver the goods as soon as possible, the Hong Kong company then asked the Singaporean client to fly to Turkey with them to examine the supply source.

When they arrived in Ankara, the capital city of Turkey, the negotiators from the Hong Kong company met the Singaporean representatives who had just arrived and the general manager from the Turkish company which claimed to have business relations with the German company. When the representatives of the Hong Kong asked them to see the fertilizer at once, the Turkish representative said with embarrassment that their main business was munitions, but they did occasionally participate in reselling goods at a rising market.However, they had limited amount of goods available at the moment, which had just been disposed of.But their German trade partner was said to be a large company, specializing in fertilizer, with many branches in a number of countries.They had just been told that its London branch still had an adequate supply.Hong Kong representatives felt that such complicated trading relationships would increase the trade risks dramatically so as to undermine the possibility of a successful deal.But considering the urgent domestic need, and the distance between Turkey and England, which was not too long, the Hong Kong and theSingaporean representatives flied to London again, with the permission from their headquarters, to make an investigation at the fertilizer sources in person.

Although the Hong Kong representatives had informed the British company of the flight schedule, when they got to the Heathrow Airport of London, they didn't meet the London representatives who were supposed to meet them there. The Hong Kong representatives stayed in a hotel arranged by local friends and informed the London company that they hoped to visit the London company and examine the goods as soon as possible early in the next morning.But the London company claimed that their manager had gone on a business trip and would not go back to London until that evening.So it was inconvenient to give receptions to the Hong Kong company and they would meet in the hotel where the Hong Kong representatives stayed.

At 21：30 of that night, the British manager came to the hotel in a white BMW, three hours later than the arranged time 18：30.

In the hotel bar, temporarily serving as the negotiation room, the Hong Kong representatives complained severely about the impoliteness of the London company：they did not come to the airport to meet the Hong Kong representatives；they did not allow the Hong Kong representatives to visit their company and examine the goods source；as the host party, they did not provide appropriate negotiation places；they had been late for the negotiation for three hours. Therefore, the Hong Kong company had every reason to doubt the sincerity of the London company.The London company argued for a moment but they could neither explain their behavior nor eliminate the doubt of the Hong Kong company especially as to the key point of examining the goods, the London company found all sorts of reasons in order not to allow the Hong Kong company to have a look at the goods.Hence, the negotiation broke up in discord.The representatives from Hong Kong company and the Singaporean company had to come back with disappointment respectively.

We can see from the above case that since at the very beginning the supplier—the so called European International Fertilizer Group—lacked sincerityto close a deal, it had brought a succession of troubles for the purchaser（the Hong Kong company）and ruined the negotiation atmosphere. What's more, in the opening phase when they had to turn up, the London company had revealed its defects as being crafty and rascal and finally the negotiation had ended up in failure even before it really began.

The international business atmosphere refers to the atmosphere and the surroundings that one or both parties create before the negotiation gets a start, which can reflect the frankness, national characteristics, cultural attributes, style choice and psychological implications of one party or both parties. Good negotiation atmosphere will help the negotiation proceed smoothly；on the contrary, bad negotiation atmosphere will affect the course of the negotiation or even destroy the whole negotiation.

4.1.1　The function of negotiation atmosphere

The main purpose of multi-national business negotiation is to make the biggest profit；therefore, the negotiation atmosphere is mostly positive, friendly and constructive. However, some negotiations are aimed to solve the intricate trade conflicts or hope to force the other party to make concessions to sacrifice their interests.Under these conflicting circumstances, the negotiation atmosphere tends to be tense and contradictory.

The negotiators taking part in international business negotiations are people from different countries. They are people；thus they have different characters and personality traits；they follow their own norms；and they are exposed to different cultures, beliefs, national attributes, religions, political environments, experiences, and family and education backgrounds.The special atmosphere and surroundings always have an immediate effect on people's moods；on the contrary, the attitudes and moods of the negotiators, in turn, also influence the negotiation atmosphere and influence the course and result of the negotiation.

Different negotiation atmospheres have different impacts on the negotiations.（1）Positive and friendly

At the first sight, the warm, positive and cooperative atmosphere created by one or both parties will help the negotiation to develop towards agreement. For instance, both the German editor of the“European Business”magazine and theChinese editor of“International Market Journal”magazine knew that their cooperation would be a great“ice breaking”attempt for Chinese business media and the biggest difficulty they faced was how to be prudent enough to circumvent policy risks so that their cooperation would not come to a premature end.So in the very beginning, they acted with mutual understanding and in positive and cooperative manner to create a most favorable atmosphere in which both sides were sincere, serious and cooperative to overcome the difficulty.This can be reflected by the fact that the Chinese editor met the German editor at the airport, made an arrangement for him to stay in the Bund Hotel very near to the magazine agency, invited the guests to dinner in a famous hotel where many European leaders had been welcomed, and led the guests to the bookstands in the streets and the subway stations to experience the influence of the Chinese magazine.These positive actions had laid a solid foundation for the following substantive negotiation and the signing of the contract.（2）Tense and contradictory

This is an atmosphere opposite to the friendly and positive style. It occurs if negotiating parties fail to cooperate in a pleasant way, or one party makes requests which are hard for the other party to accept before the opening.In this case, the atmosphere may turn to be so tense and contradictory that it may lead the negotiation to the verge of crisis.【Case】A Chinese steel plant was negotiating with global iron ore suppliers. There existed great differences between the two parties on the price from the very beginning.The Chinese factory held that the price had increased by 71.5%in 2005 than the year before, and so in 2006 the price should be adjusted downward on this basis.But with the experience of victory in the previous year, the three global largest iron ore suppliers stuck to tougher attitudes with the statement that they wanted to increase the price based on the last year's by 20%.The biggest iron ore supplier—the Brazil Companhia Vale Do Rio Doce（CVRD）even threatened to increase the price by 30%to 40%，which made the negotiation for the iron ore orders of 2006 start with a very tense posture which looked as if the two sides were having a life-and-death struggle with their sword drawn and bows bent.When European, Japanese and Korean steel companies allyielded to the price rise, Chinese steel factories were about to lose the orders and would have to buy the iron ores at a higher price.In the last round of negotiation, Chinese steel factories had to accept the 19%price rise of the iron ores.（3）Brief and straightforward

When the negotiating parties all have a clear picture of and make full preparations for all the details, have the same considerations or solutions to the problems that may crop up and the same expectation of the objective to reach, the negotiation atmosphere tends to be light, tightly-arranged and straightforward. For example, in the bilateral negotiation of China's entry into WTO, New Zealand and China have few conflicts and are complementary to each other, both parties found the solution in the related competitive fields.Meanwhile, China hoped this round of negotiation would create a beneficial situation for the following bilateral negotiations, so we had finished the bilateral negotiation in quite a short time.（4）Dilatory and protracted

This is quite common in multi-lateral business negotiations. Due to the great disagreement among the parties on the subject under discussion, no one party is willing to make concessions to other parties, and so this will affect the undergoing of the whole negotiation.This kind of dragging, slow-paced, word-splitting and marathon-like negotiation will usually cost years.It will either end with no result or an agreement which is easily violated by the participants.For instance, in the“Doha Round”about agricultural issues in WTO, there existed great disagreement on opening the market and reducing agricultural subsidies between the developed and developing countries.Therefore, the negotiation was dragging on and on without an end.There were several times when an agreement was about to be signed, but each time it fell short of success for lack of a final effort at the last moment and had to end without any result.This type of lengthy, complicated multi-lateral business negotiations was a severe ordeal of one's energy, physical strength and state of mind.（5）Cold and perfunctory

One or both parties lack the frankness of cooperation or confidence, and then they will reveal a perfunctory and avoiding attitude. Take the fertilizer purchasing case for example, uncertain source, uncertain company in Germany or inEngland, no reception, no negotiation place……，Behind the cold and perfunctory behavior, how can they offer genuine fertilizer except deceitful behaviors and avoidance？（6）Sedate and reserved

Though one party acts enthusiastically and positively, the other party—especially the host party, creates a rigid, and serious atmosphere out of the consideration of cultural customs and negotiation strategies so as to direct the negotiation towards the direction and the result they hope for.【Case】An American company was selling a production assembly line of advanced technology. Each party sent a strong large-scaled negotiation group to Tokyo for the formal negotiation.The American party was quite confident out of the trust in its own technology with the hope to win.In the opening of the negotiation, the American party demonstrated how advanced their technology was, how reasonable their price was and how perfect their after-sale services were.But the Japanese representatives appeared to be a little bit stiff and kept keeping notes and silent.The American representative had finished the speech, only to find the puzzled look on the faces of the Japanese representatives.They asked the Japanese whether they had any questions, but surprisingly, the Japanese said they could not understand it at all.The American representatives had to restate their presentation time and time again, and their previous excitement died away.The negotiation atmosphere had turned from an enthusiastic and warm one dominated by the Americans to a depressing and rigid or reserved state coming along with the Japanese's attitudes.The Japanese party saw that it was time to take actions, so they seriously pointed out a succession of technological defects and price issues, which made the American representatives very embarrassed and greatly agitated.Eventually, the Japanese company pressed the price of the production assembly line to the lowest level acceptable to the American party.

In fact, the Japanese representatives understood every issue that American party had presented. But in the enthusiastic atmosphere created by the American party, the proposal of the Japanese party could hardly be accepted by theAmericans.So the Japanese side adopted the tiresome strategy by turning the warm and friendly atmosphere into a cold and stiff one, leaving the Americans weakened and demoralized.Thus, the Japanese changed the original disadvantageous situation into an advantageous one, and changed his inactive and passive role into an active and dominant role in the negotiation, and finally, achieved their target of introducing the most advanced technology at the lowest cost.

As a matter of fact, the atmosphere of international business negotiations is not limited to the types listed above. At the very first contact of both parties, languages, facial expressions, the contents of the talk, eye contact and the force of the handshake and other behaviors have already created an opening atmosphere, as well as exert an influence on the course of negotiation because the first impression is so deep that it has basically set the tone and atmosphere for the negotiation.

In most cases, we should create an advantageous atmosphere before or in the opening of the negotiation so as to direct the negotiation and manipulate the other negotiation rivals. If a harmonious atmosphere is set up in the very opening of the negotiation, both parties will have easygoing communication and discussion；if in the very beginning, one or both parties let off steam and blame each other, it will cast a shadow on the negotiation.

However, under the counterpart's manifestation of friendly, courteous or cold manners in the initial meeting, we ought to be keen to catch some delicate change in behaviors as well, for it can possibly imply a sudden change in the situation. In the above case, the wise behavior of the Japanese party can be considered as a successful example of changing negotiation atmosphere.

4.1.2　Various factors that influence the opening of the negotiation

The factors that influence the opening of the negotiation can be analyzed from the point of negotiators, negotiation surroundings and opening remarks.（1）The behavior of the negotiators

①Facial expressions

The facial expressions of the negotiators can reflect their state of mind. Whether a person is relaxed or nervous, self-confident or hesitant, in a high spiritor tired can all be reflected from their facial expressions, especially from the changes of their expressions in their eyes.For example, frank and natural facial expressions reflect sincerity；indifferent or cold facial expressions reflect avoidance or distain；exaggerated and excited facial expressions reflect nervousness or cunning.While the subtle changes of the expressions in their eyes—the window of the soul—can reflect the state of mind of the other party.Psychologists hold，“the first eye contact of the parties in a negotiation matters the most.”We can tell at the first sight whether our counterparts are honest or cunning, active or sedate.

②Temperament

The temperament of negotiators is their inner disposition or nature as shown in the way they behave or react to situation or people, that is, it is reflected in their personality traits and personal accomplishment or quality. Though the temperaments of the people from different countries or regions will be influenced by their national characters, the fundamental factors that determine one's temperament is family education, cultural heritage, education level, moral standards, and outlook of life.One can appear to be more graceful by being gorgeously dressed and richly ornamented or by behaving or talking in an elegant way, but he can not pretend to possess a certain kind of temperament.

③Grace

Most participants in business negotiations tend to pay more attention to their own graces. Grace refers to the external display of one's quality, knowledge and cultivation.Grace can be reflected from the following aspects：

a. Appearance and manners.Before uttering any words, your appearance and clothes always make a strong initial impression on other people.A graceful and unaffected appearance, a neat and tasteful suit and considerate and polite manners will draw the others close to you.One point needs to be pointed out：The clothing must fit one's own grace.Don't be too peculiar about your dress or wear clothes of too large or too small size.Don't wear clothes of over bright colors.Don't loosen the tie or unbutton the shirt or wind up the sleeves or do other things implying you are tired or bored（except the case that they are considered as part of strategies）.

b. Speech and deportment.Logical discourse or utterance, a sense of humor, proper speed as well as graceful behaviors can quickly attract the other party's attention, leaving them a good first impression.A few people are born with thiskind of charm, and most others can obtain it through training and accumulating experience.One thing we need to pay attention to is that we should shake hands with other people without hesitation and we should identify whether the other party is mild, hard or perfunctory from the force of the handshake.

c. State of mind.No matter whether it is at the first meeting or the negotiation opening, negotiators'confidence and vigor can enlighten or inactivate the negotiation atmosphere so as to stimulate the initiative of the other party；on the contrary, negative, indifferent and nervous manners will make the other party doubt your frankness or your competence.

④Personal hygiene

People who take part in international business negotiations should pay attention to their personal hygiene. Unkempt or sweaty negotiators or those who have underarm odor or halitosis always embarrass other people to dodge them.Therefore, negotiators should wash and dress themselves properly before the negotiation.（2）Negotiation environments

The atmosphere that builds with the negotiation environment may have impact on the mood of the negotiators. Negotiation environments can be divided into sites and seats.

①Choice of the sites

If the negotiation site is chosen at the meeting room or negotiating room, it indicates that the host party attaches great importance to the negotiation. If the negotiation place is chosen at the hotel or restaurant, it's most likely that the host party hopes to create a warm and friendly climate before or after the formal negotiation, or avail the opportunity to probe the other party's negotiation objectives.If the negotiation site is chosen at the lobby or coffee bar of a hotel, it seems that the host party neglects the guests, or expects to exert temporary pressure on the other party.If the negotiation is set in the scenic open air, it conveys a pleasant message that common agreement is easy to attain.If the negotiation is conducted in the mansion or the villa of the host, it may show that the host team hopes to move the other party by establishing personal friendship in order to reach an agreement.

②Arrangement of the seats

Formal international business negotiations pay much attention to the arrangementof seats. Polite seating order is to ask the guests to sit in front of the window with the back facing it and the hosting party sits in front of the door with the back facing the door.But If the host party sits in front of the window with the back facing it and the sunshine, in a big chair across a large desk（not the meeting table），while the guests have to face the glaring sunshine or the moving objects outside the window in a relatively small chair or sofa, it will make the guests uncomfortable.The best approach is to choose the chairs of the same size set opposite on each side of the meeting table, and the guests are seated with their back facing the window or anywhere comfortable, making them feel just like at home.

In some countries, tables are removed and negotiators are seated side by side in order to eliminate the possibility of arousing mutual misunderstanding or psychological distance created by the tables.

In addition to the seating arrangements, we could prepare some coffee, tea or desserts, which will not only soothe the thirst, but also help adjust the atmosphere and reduce the tensions. Meanwhile, we should avoid the interruptions by telephones and visitors.

③Media and public opinions

Some important international business negotiations will get the attention of the media and public at home and abroad, and some wise negotiators make good use of the media reports to create advantageous atmosphere for their own party and to convey their intentions or exert psychological influence. For example, the chief editor of“European Business”magazine in Germany invited the Chinese editor of“International Market Journal”to pay a visit to Germany.Before the negotiation to solve the problems existing in the cooperation, the German chief editor invited a reporter of a local evening paper with large circulations to interview the Chinese editor and write a report about the cooperation of the two business media with a number of photos with the hope of demonstrating its relations with the public media and improving its own image as well as making the Chinese party feel the concern of the local public so as to lower the psychological alertness, while“International Market Journal”made good use of lamppost ads in China to propaganda itself in several main subway stations with heavy flow of passengers in Shanghai to show its strength and superiority, creating an formidable atmosphere for the negotiation which attacks the mind.

Now that both of the modern media like TV, Internet and the traditional media like newspapers and broadcast play an influential and powerful role in manipulating the public opinion, we should make a careful plan on how to arrange the interviews, how to choose the negotiation contents that can be revealed to the most proper media at the lowest cost in order to pave the way for the formal negotiation or to exert one's influence on the counterpart.（3）Prologue or opening remarks

Before we enter into the formal negotiations, some neutral topics can be chosen as opening remarks such as the local weather, travel hearsay, films and theater performance, personal hobbies, jokes as well as the previous co-operations. These topics, on the one hand, are cheerful, light and easy to arouse the resonance；on the other hand, they are not related to business, and thus helpful to build a harmonious and friendly atmosphere.

This type of light prologue seems to be quite necessary in international business negotiations. Negotiators can make good use of such kind of introductory remarks to tell some jokes in order to exert psychological implications to the other party.No doubt, we had better carefully choose the topics that can make the other party have some sorts of associations or alertness.

In addition, we should make sure that the prologue can not take up too much time. As long as they can activate the atmosphere and lessen the tension, that's OK and we should shift to the next formal stage of giving opening statement and exchanging ideas at once.

4.2　Opening Steps

The opening of international business negotiations often has to undergo the following three steps：（1）offering the meeting agenda to every representative（2）exchanging ideas on the agenda and related questions（3）the chief representative from each party making statements respectively

4.2.1　Administer the meeting agenda

Since there are usually language barriers in the course of international business negotiations or though both parties can use the same language, in order to improve the efficiency and to demonstrate respect and equality, the host party often provides a negotiation agenda to every representative printed in the language that both parties understand. The main contents of the agenda are the schedules of the meetings, the subjects of the meetings and the profiles of the representatives.This can assure the appropriate progress of the negotiation, save some recording time and make the representatives more concentrate on listening to the statements of the other party and have a clear picture of the details and key points of the negotiation.

4.2.2　Exchange the ideas【Case】As India is now on the road to an economic super power rapidly, it has become the target country where various global computer and software companies come to invest in establishing factories and R＆D agencies. Bangalore, a city in South India, has attracted a large number of global first-class information and technology companies to invest there for its convenient transportation, talented people and humane environment, so it is called“Indian Silicon Valley”.However, in 2004，this city, with a population of over 6.8 million, only had 2700 guest rooms and suites in its hotels，1/16 of the hotel rooms in Tokyo with a population of 12.7million in Japan（about 87 thousand hotel rooms）！Every year millions of visitors came to Bangalore, the inadequate hotel rooms and the increasing hotel fees made it“the most expensive city in hotel fees”.The most luxurious hotel—The Leela Palace Hotel charges range from$390 to$450 for each room or suite per night, and over 90%of its guest rooms and suites are occupied the year round.

In order to scramble the extremely scarce hotel room resources, more than 100 multi-national companies including the American IBM Company have signed a contract of“Priority to use 1，500 to 2，000 room-days every year”. IBM has a routine negotiation with the hotel about the rooms use and prices every autumn.In this routine negotiation, IBM would always propose a yearly room use list and segment it into the changes of the room use every month with the aspiration that the hotel would satisfy its need.The representatives from the hotel always propose their own revision suggestions towards the proposal of the IBM Company, emphasizing that they have to assure the number of the guest rooms requested by other hundreds of clients.And some companies would rather offer the price twice as much as the standard price to preserve the rooms, so it is difficult to meet the need of IBM.However, they need to sign a one-year contract to clarify the reasonable room numbers and the margin of the price rise.No matter whether the quota is used up or not, IBM must pay all the bills within the quota；If the number of the rooms is beyond the stipulated number in thecontract, they could not enjoy the bargained favorable prices；If the number of the rooms is under the stipulated number, the hotel is entitled with the right to limit the quota for the company in the year that follows.

We can get the knowledge from the above case that before the formal, essential negotiation, the representatives from both parties may as well exchange ideas on the agenda proposed by one party and reach agreement on the goal, main subject and the timetable for the negotiation. The negotiation goal refers to the reasons or purpose to take part in the negotiation for both parties and the benefits both parties can obtain from the negotiation outcomes.The main subjects refer to the issues or problems both parties should solve in the negotiation.Negotiation schedule or timetable refers to the time arrangement of this negotiation.The exchange of the ideas between both parties can not only complement and improve the agenda of the negotiation, but also can avoid the unfairness caused by the one-sided decision.

Indeed, some small-scale negotiations can omit the procedure of idea exchange and enter the statement period at once with the prerequisite that both parties are quite familiar with or have no disagreement about the contents of the negotiation.

4.2.3　Opening statements

Before the substantive negotiation, both parties always have to make a formal opening statement to clarify the basic principle regarding the discussion issues at stake with an emphasis on the self-interests（gains and losses）of both parties from the negotiation. The function of opening statements is to clarify the viewpoints, create advantageous atmosphere for the party and explore the reaction of the other party.For example, IBM Company emphasized to the Leela Palace Hotel that it was quite important to make sure that all IBM executives and technicians to India on their business trip have rooms to stay at any time, for it was vital to the corporate operation as it would affect the development of IBM in Bangalore.The representatives from the hotel stated that they paid much attention to IBM company and hoped to develop a long-term relationship with it, but they could only use annual quota and price lever to allocate the quota of the rooms under the situation that not any new hotels had ever been built.In this way, they could assure their own benefits and meet the needs of their key clients at the same time at best they could.Therefore, we can see that IBM wanted to assure the number of the roomsas well as get the preferential prices.The hotel thought IBM was a large powerful company, so as long as it paid proper prices, the number of the rooms could be guaranteed.After the statements by both parties, IBM company realized that the number of the rooms and the prices would be the key point of the negotiation in the following discussion.The hotel also realized that they could neither charge too much to offend the key client, nor could they be too obedient so as to lose the excess profits that originally belonged to them.

Three points ought to be paid attention to in the opening statements：（1）Contents of opening statements

In the opening statements, the opinions of both parties should be clearly stated. When you make an opening statement on behalf of your side, the contents of your statement usually include the following aspects：

①your party's understanding of the problems that have been discussed in the opening phase；

②the interests and assurance that your own party hopes to obtain in the negotiation（including the problem of principles that your party will not compromise, concede or yield）；

③the parts that your party is willing to discuss with the other party（releasing signals for the potential concession）；

④the benefits your party have brought to the other party in the previous cooperation（implying that the other party ought to have the gratitude and make compromises and concessions in turn）；

⑤the possible opportunities and obstacle that will arise in the future negotiation and cooperation.（2）Methods for delivering opening statements

Negotiators usually choose different methods to present their opening statements in response to the different issues for discussion and different negotiating counterparts. A varied choice of statement methods can create a varied atmosphere for the negotiation（These details are to be examined below in 4.3 of this chapter）.（3）Proper reactions when one party listens to the statements of the other party

When the other party makes statements, our party should do the following things：①Form a clear picture of the rival's opinion and ask them questions to clarify every point that we are not clear；

②Try to take notes while listening to them, and write down their arguments but do not argue, attack or question them immediately；

③We should be good at summarizing the points of the other party and make the key points of the negotiation stand out；

④Don't ask any aggressive questions when they are making the statements；

⑤Give a summing-up speech at the end to review and show your concern for the interests of all the relevant parties；propose a highly feasible and thorough solution to make the negotiation prospect expectant.

4.3　Opening Strategies

At the opening ceremony of one APEC summit meet, the host country arranged on purpose or happened to arrange the seats for the ambassadors from mainland China next to the representatives from Taibei China. Though the host country gave diplomatic recognition to China rather than Taiwan as a sovereign state, but like some countries, it allowed Taibei to establish an economic and cultural office in charge of coordinating the trade relationships between each other and handling traveling visa.

It was in itself a mistake for the host country to arrange the two“foes”sitting together. What's more, when the host country introduced Taibei representatives, it referred to the representatives as“Taiwan ambassador”.The Chinese ambassador to the host country went out of the room in a huff at once as a token of protest.When he returned to the meeting room again, he read out in both English and Chinese a written statement：there is only one China in the world, i.e.the People's Republic of China that he was standing for.Although a foreign minister of the host country made frequent apologies, it could be hard to deny that the behavior of the host country was an unintentional one, since before that meeting Chinese government urged the host country not to invite Taiwan for this summit meet.Even earlier before, China opposed the host country's efforts to support Taiwan to become a permanent member of the UN Security Council.Therefore, the host country took the opportunity of APEC summit meeting“mistake”to take revenge on China so as to increase its own bargaining power；at the same time, it could demonstrate its own independence in foreign affairs to developed countries and its neighboring countries such as America and Japan.

Opening strategies are the measures that negotiators take to gain an upper hand in the opening phase so as to in turn secure their control over the negotiation elements.

Various strategies are utilized in international business negotiations from the beginning to the end. If we can give free play to our strategies at the very outset of the negotiation, it will help us enhance the atmosphere beneficial to our side, enabling us to take the initiative in the negotiation so as to control the pace and direction of the negotiation as well as affect the ultimate results of the negotiation.Column 4-1　High-spirit, Low-spirit and Natural atmosphere

High-spirit atmosphere refers to the situation in which the negotiation is animated as both parties are positive and enthusiastic, and are optimistic about the prospect of the negotiation, and generate pleasant elements as the leading factors. Usually when our party gets the upper hand and hopes to reach the agreement with the other party, high-spirit climate ought to be created.

Low-spirit atmosphere is the one that is serious, depressing and downcast, and it is the situation where the negotiators are in low spirit, having an indifferent attitude with unpleasant factors in a leading role. Usually when we still have the bargaining ability and counters but can not secure an absolute advantageous position and we have to exert some pressure on the other party, we can attempt to create a low-spirit atmosphere.

In a natural atmosphere, negotiation is neither animated nor oppressive. Both parties are in a natural and steady mood and have peach of mind when they take part in the negotiation.Many negotiations are begun in a natural atmosphere, and you do not need to work on it purposefully.This kind of atmosphere will be of great help to convey accurate and trustworthy information.When we know little about our negotiation partners, natural atmosphere is suitable for both parties to start the conversation.（1）Resonant opening

Resonant opening is also known as one-paragraph opening strategy. At the beginning of a negotiation, this tactic allows negotiators to use an“assertive”tone to build up a kind of“resonance”so that under this friendly and harmonious environment both parties can work together to push the negotiation forward.

Psychological studies show that people tend to favor those who share the same opinion with them and are willing to adapt their opinions to those of the people who have“resonance”or identify with them. This is the psychological basis for“resonance”opening strategies.【Case】An automobile company in the southwest of China established a friendly relationship with Ford Company of America. The Chinese party had the intention to introduce two new models of cars from the American party in addition to the two models they already had.In the course ofpreparing for the negotiation of introducing new models, Chinese party got the knowledge that the American party was unwilling to provide the technology for producing these two models that had just been launched into the European and American markets.The Chinese chief negotiator, the vice president of the automobile company, asked his employees to contact the local television station and get copies of all the video materials of the NBA matches undergoing this year and watched most videos of the match at nights and weekends.In order to enhance his memory, he had written down the scores of some exciting and gorgeous matches, names of the big stars playing in the field and the points they scored in these matches, their extraordinary and super performances and misplays and finally had all of them in mind.

When the Chinese and American parties seated themselves and began the negotiation about the introduction of new models of cars, the Chinese vice president congratulated the American manager on the success of the team from his home state in the NBA match with the score of XX to XX, much better performance than the year before！The American manager was immediately excited：Do you like NBA matches？I have seen all the NBA matches in the U. S.A.，for which my wife often complained.The Chinese vice president said，“My wife almost divorced me for my ignorance of the housework due to the NBA matches！”The American representative smiled，“Our interests are quite alike—by the way, did Yao Ming play the game？How is his performance？”The Chinese vice president said，“He did not show up in the court for his injury on the foot.”The American representative said，“What a pity！However, if Yao had played in the match, our team would have had a difficult time of it.But Yao is something and Americans like him very much.”The Chinese vice president said，“Yao is China's pride.We have also got the Olympic hurdle champion Liu Xiang, as well as the Chinese world champions in the women's tennis doubles……”，then he changed the topic，“in recent years, China has achieved remarkable success in sports games.The common people especially the ones among the young professional managers and white collars are fond of going to the fitness clubs, picnics, hiking, andexcursion.They are keen on surfing the Internet, staying in the bars and traveling around the world, and enjoying other newly-emerging things.Just for this reason, we would like to introduce two models of sports cars（sedans and hatchbacks）from your company.We do hope your company will not follow the suit of German manufacturers who have refused to give China the newest models, which led to the fact that their large potential market shares in China have been taken away by Japanese and Korean sports car producers.”The American representatives suddenly realized that they had a quite small proportion of market share in the field of sports cars in China and as long as they can take quick actions, the profitable opportunities would belong to them.Hence, the representatives from Ford Company reached an agreement with the Chinese party on the introduction of new models very quickly.

Resonant opening can be used with the aim of creating conditions for the other party to agree with us. The commonly-used ways of resonant opening are conferring approach, inquiring approach and complementing approach.

①Conferring approach suggests that we ask for the opinions of the other party with a kind tone to boost discussion toward our goals（in fact, we have a clear picture in mind），then we approve of their proposals and are willing to follow their proposals（as it is the same with ours）to proceed with our work.But we need to pay attention：when we agree with the other party, we should not make the other party feel flattered, but let them feel we agree with them because we identify with them and we understand and share their ideas.

②Inquiring approach is to design your answer in the form of a question to induce your counterpart to move toward the goal that you have set.For example, you may ask them questions like“How do you think about the idea that we put the price terms aside and come to them at the end of the negotiation？”

③Complementing approach encourages you to avail yourself of the opportunity to add your own opinions to that of the other party and talk them around to your way of thinking and let them speak in your voice, much like what is advocated in The Arts of War by Sun Tzu—replace the beams and change the pillars—let your words penetrate his skull so that he would say what you want to say.

We'd better use resonance opening in natural atmosphere or high-spirit atmosphere. Good use of resonance opening can turn the natural atmosphere to high-spirit atmosphere.But the use of resonance opening under low-spirit atmosphere tends to make ourselves embarrassed and passive.（2）Frank opening

Frank opening refers to the way in which we convey our opinions to the other party frankly so as to make a breakthrough in the negotiation.

This kind of strategy is usually used between regular clients because it can save lots of courtesies and time, and we can put forward our opinions and requirements directly, which may also make our partners trust us more.

Frank opening also applies to the party with weak negotiation power. When we are quite clear about each other's strengths and weaknesses, frankly revealing our weaknesses to the other party can help us gain the understanding and leave a good impression on the other party if we demonstrate our sincerity in this way.【Case】A branch secretary of the Communist Party in a village in Jiangsu Province had a negotiation with foreign businessmen. After exchanging their business cards, the Party branch secretary found the foreign businessman was very alert about his status；therefore, the negotiation did not move on smoothly.Hence, the secretary frankly told the foreigner，“As a branch secretary, I am, in fact, the leader of the highest rank in our village.I have the right and power to make economic and managerial decisions in our village and I am not a layman of economic activities because so far I have set up many enterprises.”Even though our economic development is not on a high level and our conditions are poorer than some coastal cities, but we are all farmers, diligent and simple and our labour and land costs are much lower compared with those in the cities.We sincerely hope to cooperate with you.It does not matter whether our negotiation is successful or not, for at least you, the“foreign”boss, can make friends with me, a Chinese“country”folk.Hearing these frank words, the foreign guest burst into laughter and was no longer overcautious and vigilant.As a result, they entered the next stage of the negotiation, talking about substantive issues at once.

As a matter of fact, frank opening can be used in various negotiationenvironments. It tends to turn low-spirit and natural atmosphere to the high-spirit one.（3）Evasive opening

Evasive opening strategy, also referred to as reserved opening strategy, means that at the beginning of the negotiation, we do not answer some key questions raised by the other party definitely, directly or explicitly, but try to avoid or reserve the information too much and too soon, so that the other party will generate a feeling of mystery, then as they are wondering what we intend to do, they will follow our plan, driving the negotiation advance to the direction we desire and target.【Case】One day in late 1990s, there suddenly came three Japanese businessmen to Yujiang Artistic Carving Factory in Jiang Xi, who wanted to purchase the shrine items produced in the factory. One of them claimed that they wanted to purchase all the shrine products of the factory.The over-excited factory leaders thought it over carefully and wondered why the representatives from three companies came here together as if they had made a prior appointment.They knew that these companies originally handled the products from Korea and Taiwan China.What was behind their sudden visits？There had to be some reasons for this action.Then, the factory arranged them to settle down, but it did not haste to give them any replies.Meanwhile, the technology department quickly browsed the latest market information in Japan, only to find that the wood quality and the craftsmanship of their products were exquisite and superb, but the prices of their products in Japan were much lower than those from Korea and Taiwan China, which was just the reason why they rushed here and vied with each other in placing orders.

After getting to know all of these reasons, the factory applied the

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